Europe rules against State in landmark VHI case which could cost company millions
THE European Court of Justice has ruled that the VHI enjoys regulatory exemptions that its competitors cannot access.
In a landmark case, the Court has also ruled that Ireland will have to pay for the action which also found that the insurer failed to fulfill a number of obligations under a number of EU directives.
The exemptions were granted back in 1973 and the European Commission, which took the case against Ireland, believes the company is much different now.
The VHI is also exempt from certain EU rules in the non-life insurance areas – essentially the company is not being regulated by the Central Bank like other players in the market.
While it has been Government policy that the insurer would be “authorised” by the bank, this has yet to happen.
This would mean VHI having to bring its reserves up to 40pc of premium income – compared with 20pc at present – this would represent an investment of €338m.