Deirdre Clune (Cork South Central, Fine Gael)
Link to this: Individually | In context

Question 42: To ask the Minister for Health and Children if the VHI has acquired its reserve fund, as obliged under EU competition; if it is regulated by the Financial Regulator in time for the revised deadline of 31 March 2009; and if she will make a statement on the matter. [13117/09]

Mary Harney (Dublin Mid West, Progressive Democrats)
Link to this: Individually | In context

The Voluntary Health Insurance (Amendment) Act, 2008 placed an obligation the VHI to have accumulated sufficient capital by 31 December 2008 to allow the company to submit an application to the Financial Regulator for authorisation as an insurance undertaking. When the Act was passed it appeared that the company would be in a position to satisfy the Regulator's solvency requirements. Accordingly the VHI submitted its application in June 2008.

As part of the application process the VHI was required to submit detailed financial projections for a number of years encompassing a robust business plan and sufficient capital. Obviously certain key assumptions would have been made by the company in preparing the projections submitted to the Regulator. One of these was that it would receive the transfers due under the 2003 Risk Equalisation Scheme. These transfers would include the amounts likely to be paid in the period covered by the projections as well as transfers due for the period from the activation of the scheme. The transfers had not been made pending the Supreme Court's decision on BUPA's appeal against the High Court finding upholding the validity of the Risk Equalisation Scheme. In the event the Supreme Court upheld BUPA's appeal and found the scheme to be ultra vires.

On 19 November 2008 the Government announced that it would be introducing a series of interim measures in support of community rating pending the introduction of a new risk equalisation scheme. These involve the granting of additional age related tax reliefs which are financed by a levy charged on health insurance companies. The measures are set out in the Health Insurance (Miscellaneous Provisions) Bill, 2008 published last December. The interim scheme was notified to the European Commission in November as a potential state aid. Assuming a positive response from the Commission I expect to introduce the Second Stage immediately after the Easter recess.

Following enactment of the envisaged arrangements, I would hope that VHI will be in a position to satisfy the Regulator that it has a sufficiently robust business plan and the required capital to meet the authorisation requirements. Given the older age profile of VHI's customers I expect the company to be a net beneficiary under the interim scheme. Having regard to the timeframe for passing the Bill and any other measures necessary to ensure VHI is in a position to pursue its application, an Order setting a new deadline of 1st September 2009 is being prepared. The Government remains committed to having the VHI authorised as soon as possible and I have asked the Board to proceed accordingly and to explore all the options available to it under the VHI Acts.