Leo Varadkar: VHI changes will not impact customers
Mr Varadkar also said VHI would continue to remain in State ownership after completing the authorisation process to trade as a non-life insurance company.
VHI will operate as a limited liability company with subsidiaries from Friday and will have to maintain a certain level of reserves, just as its competitors are required to do.
A spokesperson for VHI said they had no plans at the moment to rise premiums.
The insurer applied for authorisation last year to comply with EU regulations on minimum solvency levels applying to rival insurers.
The VHI raised €90m in subordinated debt through a funding deal with Berkshire Hathaway, building on an existing partnership dating from 2013.
Speaking on behalf of the Government, Mr Varadkar said he welcomed that VHI had achieved authorised status without the need for exchequer investment. The minister said the completion of the authorisation process also removed Ireland’s exposure to substantial EU fines by addressing the European Court of Justice judgment of September 2011.
At the time the court ruled VHI could no longer benefit from derogation from the authorisation requirement. VHI’s private competitors put pressure on the health insurers to become a regulated entity and took a case to the EU on the issue.
VHI chief executive John O’Dwyer said the insurer’s ability to raise private finance and its strong financial performance over the last three years allowed it to meet the Central Bank’s solvency requirements.
VHI also published its annual results for the year ending December 31, 2014, which show it had a net surplus of €49.8m, down from €65m in 2013. Gross earned premium for 2014 totalled €1.462bn — a 1.9% fall on the previous year.
At the end of last December, VHI Healthcare had reserves of €453.7m — a 16.7% increase compared to its 2013 position.
Total gross claims incurred in 2014 came to €1.377bn — up by 0.8% compared with €1.366bn in 2013.
The increase in claims costs on the previous year includes increases in public hospital charges introduced by the Government last year. The insurer’s costs for medical care as a percentage of earned income last year was 89%, compared to 87% in 2013.
From Friday the business of the VHI board, trading as Vhi Healthcare, will transfer into a group of incorporated companies, two of which will be regulated by the Central Bank of Ireland.
Mr O’Dywer said VHI would continue to drive down costs, increase efficiencies and provide appropriate health insurance plans and services to customers: “We will also focus on improving the overall health and wellbeing of our customers and on creating new commercial opportunities for the companies.”
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