VHI reports profits of €33.8m, seeks premium rise

The Minister for Health, Mr Martin, will today discuss a request for an 8.5 per cent premium increase with the VHI on the same day the health insurer announced profits of €33.8 million.

Questioned on whether the increase would be granted, the Minister said a decision would be announced tomorrow.

It is expected that Mr Martin will choose not to exercise his veto having discussed the issue with his cabinet colleagues yesterday and will the allow the increase to proceed. This would bring to 42 per cent the rise in VHI premiums over the past three years.

In its annual report, the health insurer said €89 out of every €100 earned from premiums was paid out in claims.

Mr Vincent Sheridan, chief executive of the VHI, said the number of treatments claimed for grew by 14 per cent in the year ending February 2003. The average cost of claims dropped by 1.9 per cent over the same period.

Mr Sheridan defended seeking to increase premiums while generating such profits, stating sufficient reserves were essential to the long-term viability of the company. This year's profits of €33.8 million were significantly ahead of the €14.7 million the previous year.

"The business remains totally dependent on action by Government on Risk Equalisation and commercial freedom for Vhi Healthcare. Since the year end, the Oireachtas has passed regulations to introduce Risk Equalisation but it will be another year at least before the fund can be established and our members see the benefits," Mr Sheridan said.

The health insurer said its existing customer base was now 1.55 million following the addition of nearly 70,000 new members last year.

Last year saw a fall in VHI's operating costs to 8.4 per cent down from 9.8 per cent the previous year.

Asked whether he was going to sell off the VHI, Mr Martin said the issue was on the Government's agenda but stressed no decision has yet been reached. He said the Cabinet would return to the issue in the autumn.