EU puts Ireland in dock over Vhi funds failure
Both the Department of Health and the Vhi said they hoped to fulfil requirements as soon as possible. They told the European Commission they would be in compliance by September.
The prosecution was launched by Internal Market Commissioner Charlie McCreevy two years ago following a complaint from Vivas, then the smallest of the health insurance companies in the Irish market.
Vivas objected to the Vhi being exempted by the Government from putting aside 40% of their premiums to ensure they had sufficient capital to meet all claims.
However, this exemption was based on the Vhi being a health insurer only and operating under strict conditions at the time the legislation came into force. Since then the state-owned company began offering other types of services including travel insurance, which the commission considered changed the character of the company and brought it under the legislation.
The Government some time ago said it was changing the Vhi’s favoured status and was giving the company until 2012 to meet the 40% requirement, which two years ago was €370 million.
At the time the Vhi said it was confident it would be able to set aside this sum within the Government’s time limit of 2012. Since then the department has given them a new time limit of September this year.
However, the European Commission says it cannot allow this extra time and demands the Government brings Vhi into line now.
A statement from Health Minister Mary Harney said the Vhi should be in a position to have sufficient resources to be authorised as an insurance undertaking from the Financial Regulator as soon as possible. “The Government is addressing the issue of having a level playing pitch for all health insurers and ending the special derogation for the Vhi.”
The Vhi said they have €340m, more than enough to cover all likely needs.
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