Vhi seeking 12.5% premium hike to offset €32m losses

The Vhi is seeking an increase of 12.5% in premiums from September of this year in response to major financial losses last year.

The company said today that it lost €32.3m in 2005, compared to a profit of just under €4m the previous year. It is blaming the turnaround in fortunes on the absence of risk equalisation in the Irish health insurance market.

"The loss arises from the absence of risk equalisation in our community rated health insurance market and was forecast by Vhi Healthcare two years ago," the insurer said today.

Vhi boss Vincent Sheridan said: "It is extremely frustrating to incur financial losses in a year which was particularly successful in terms of innovation, new product development, membership growth and a further reduction in our operating cost ratio. The loss of €32m arises from our commitment to members to apply a community-rated premium in a community-rated market."

The Government has approved the introduction of risk equalisation, which would force rival firms such as BUPA to subsidise the VHI in order to correct distortions in the market.

BUPA has challenged the move in the High Court. A ruling in the case has yet to be issued.

Meanwhile, Vhi said today it had notified the Tánaiste that it proposes to apply an average premium increase of 12.5% on its hospital Plans A-E, Options Plans A-E and Life Stage Choices Plans from the September 1 this year.