The VHI has dropped plans for an increase in premiums this year. The announcement was made yesterday as the State-controlled health insurance company reported a 35 per cent rise in pre-tax profits to £18.7 million (€23.7 million).
Earlier this month the Minister for Health and Children, Mr Micheal Martin, had refused to approve a VHI request for a premium increase, believed to be 9 per cent.
However, he invited the VHI to talks and there was speculation that a lower figure might be acceptable. In the event, the VHI announced yesterday that "in response to the Government's anti-inflationary initiatives there will be no increase in VHI premiums in 2000".
The number of new members rose by 6 per cent last year to a historic high of 1.49 million members, or 41 per cent of the population. After-tax profit was £13.4 million (€17 million).
The figures show the VHI still has some way to go before it reaches the full commercial solvency limit at which reserves should stand at 40 per cent of subscription income.
The VHI's reserves of £100.4 million (€127.5 million ) 26 per cent of subscription income.
Claims as a percentage of earned premiums continued their steady fall, from 99 per cent in 1996 to 86.4 per cent last year. But net operating expenses continued a steady rise from 5.2 per cent of earned premiums in 1996 to 7.5 per cent last year.
The annual report reveals a substantial increase in staff numbers at the insurance company. In all, 140 new staff were recruited, bringing the workforce to 574 full-time equivalent posts.
The VHI's chief executive, Mr Oliver Tattan, expressed strong confidence in the future when releasing yesterday's results.
"This is a very vibrant organisation and the outlook is extremely positive," he said. "The deregulation of the health insurance market in Ireland and the high growth Irish economy have opened up a range of opportunities for VHI."
Its primary care scheme, aimed mainly at covering GP fees, "will be launched when the Health Insurance (Amendment) Bill is passed into law," he said.
The scheme is still under negotiation with the Irish Medical Organisation. Because it will be risk-rated - meaning, among other things, that older people will pay more - it requires a change in legislation. Mr Tattan said e-commerce facilities, enabling companies to administer their group schemes over the Internet, are currently being rolled out to its 7,200 corporate clients.
VHI's rival BUPA Ireland yesterday claimed a price advantage over the State company despite the latter's decision not to increase premiums this year. It said its most popular plan Essential Plus is 15 per cent cheaper than the VHI's Plan B Option.
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(VHI annual report)
