Dáil Éireann díospóireacht -
Thursday, 30 Apr 1998

Vol. 490 No. 4

Written Answers. - Voluntary Health Insurance Board.

Michael Ferris

Ceist:

11 Mr. Ferris asked the Minister for Health and Children if he will report on the developments, if any, in relation to the consideration of a strategic alliance for the VHI; and if he will make a statement on the matter. [10248/98]

Pat Rabbitte

Ceist:

17 Mr. Rabbitte asked the Minister for Health and Children if he will outline the Government's proposals for the future development of the VHI; if he will provide the estimated £60 million required to bring VHI reserves up to commercial solvency levels; and if he will make a statement on the matter. [10187/98]

Minister for Health and Children (Mr. Cowen)

I propose to take Questions Nos. 11 and 17 together.

The position is that the VHI is a statutory corporate body established for the purpose of making and carrying out schemes of voluntary health insurance on a not-for-profit basis. VHI's financial results for the years 1995-96 and 1996-97 show that it has been trading at just above break-even level with surpluses of £1 million and £1.7 million respectively. It is understood that the out-run for the year 1997-98 will show a similar surplus.

Although the VHI is exempt under EU directives from meetings the prudential requirements applicable to commercial insurers in the Irish market, it minimises reserves above the minimum solvency level. However, a change in VHI's corporate status, or the removal of the exemption, would require an injection of capital to increase its reserves to 2 level commensurate with a commercial insurer in order for it to qualify for authorisation by the State's insurance regulatory authority the Department of Enterprise, Trade and Employment.

Up to 1997 VHI had been trading as a monopoly in the private health insurance market, due to the evolution of private health insurance in Ireland. However, following the enactment of legislation to facilitate the operation of a competitive market on foot of the EU's Third Non-Life Insurance Directive, VHI is now operating in a changed market. In light of the competitive market environment, it was considered necessary to examine the corporate structure which would best serve VHI into the future and I asked the VIII board to submit its views to me on the matter.

A report submitted to me by the board has been the subject of discussions between officials of my Department and VHI senior management. The report explores the options available to VHI as regards corporate status and capitalisation in the context of its continued successful operation into the future. The issues addressed include solvency requirements options for raising capital — including a Government injection of capital — and strategic alliance.

The process of examining the options presented by the board, with a view to identifying the most appropriate and effective among them, is ongoing. Furthermore, my Department has initiated a process of consultations preparatory to a White Paper on private health insurance. In this connection it is open to interested parties to submit views on the future corporate status and functioning of the Voluntary Health Insurance Board. It is my intention, following completion of this comprehensive consideration process, to prepare proposals for Government regarding the optimum course of action to be pursued in relation to the future corporate status and capitalisation of the Voluntary Health Insurance Board.