Govt insists VHI sale plan won't raise premiums

The Government is insisting health insurance premiums won't be pushed up as a result of its plan to privatise VHI.

The sale is part of a radical shake up announced yesterday.

The taxpayer will have to inject capital into the company before it can be sold off, while a new risk equalistion scheme will also be introduced to ensure the cost of insurance doesn't go up as people get older.

Rival company Aviva has welcomed the Government's plans for reform in the insurance industry

But it believes solvency levels remain a challenge and the company wants the Government to take corrective action to limit any exposure to taxpayers

Aviva's chief executive, Jim Dowdall, refused to comment on his company's interest in buying the VHI

However, he said more competition is now badly needed.