Business Irish

Saturday 16 December 2017

Consultants are chasing lucrative VHI contract

Emmet Oliver

Some of Ireland's top advisory firms -- believed to include Goodbody Stockbrokers, Goldman Sachs, Ernst & Young, FTI Consulting and UK consultancy RBB Economics -- are chasing the contract to advise the Government on the sale of the VHI.

One of the first tasks of the new Minister for Health will be to appoint consultants who will win one of the most lucrative contracts on offer this year.

It is understood the contract has attracted a range of consortiums, combining legal expertise, corporate finance skills and regulatory and economic knowledge. Some of the legal firms believed to be interested include William Fry and Mason Hayes & Curran.

Several advisory firms have stayed out of the competition believing the award of the contract is likely to go overseas.

The appointment of the consultants will trigger a widespread reform of the health insurance market. The consultants have been asked to advise on the sale of the VHI, but also to suggest ways risk equalisation may evolve in Ireland.

The consultants have ben asked to suggest "the best possible rebalancing of the risk in the market among private health insurers in the context of the sale of the VHI".

The consultants will prepare a report for the Department of Health setting out the various options available.

Each option must be accompanied by an assessment of the financial impact on the Exchequer. Splitting up the VHI into different companies with different types of customers is believed to be one option likely to be examined.

The VHI is facing a range of challenges because of its older customers, who are using the health service more and getting more complex procedures every year. The company is not meeting the solvency rules of the Financial Regulator.

and the Government could yet end up pumping as much as €220m into the firm to deal with this problem before a sale takes place.

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