Reilly welcomes EU move on VHI

The Health Minister Doctor James Reilly has welcomed the European Commission's ruling that the Government must abolish its State guarantee to the VHI.

Because the VHI is a State body, it cannot be liquidated, wound-up or declared bankrupt.

The EU has ruled that position gives it an unfair commercial advantage over its competitors.

In a statement Dr Reilly said that, while the State has consistently argued that such a guarantee did not exist, today's development represents an acceptance by the European Commission of Irish proposals.

Dr Reilly said: "It will see the incorporation of the VHI's business under the companies act by the end of 2013, while in the meantime both the State and the VHI will provide written commitments regarding the insurer's financial affairs.

"Today’s communication from the European Commission is to be welcomed . The measures outlined by the Commission today forms part of a complex process that will allow Vhi Healthcare make an application to the Central Bank in order to be authorised by 31st December 2013 as per the European Court of Justice Ruling in November 2011."

Vhi Healthcare said that they believe that it is a strategic imperative for them to be regulated in the best interests of their customers.

The firm said: "Authorisation will allow Vhi Healthcare more commercial freedom to diversify its product range thus affording customers more choice and will help Vhi Healthcare maximise opportunities to drive revenue from different markets.

"In order to progress an application for authorisation, Vhi Healthcare must satisfy the central bank of Ireland that it has a sustainable business case over the next three to five years and the introduction of a robust Risk Equalisation Scheme is a pre-requisite to that.

"Vhi Healthcare will require additional capital to meet the Central Bank’s solvency capital requirements."