VHI won't rule out hike in premiums despite its €7m profits
STATE-owned insurer VHI has reported a profit of €7.4m for last year -- but refused to rule out more hikes in premium costs this year.
It has already pushed through premium rate rises averaging 9pc this month.
Chief executive Declan Moran said it was the first time in four years that the company made a profit. In 2010 it lost €3.1m, and it had a deficit of €42m in 2009.
But he revealed that the business would need to be returning a profit of €50m-plus before it could be regarded as financially sustainable and be regulated by the Central Bank.
It will probably need to be approaching this level of profit from 2014 on, Mr Moran said.
A state injection of between €200m and €250m will also be needed to ensure the VHI meets regulatory requirements.
The insurer has expressed concern at the rising cost of private beds in public hospitals. VHI Healthcare said its hospital insurance business continues to be loss-making but that it is creating the financial environment to achieve long-term sustainability.
The profits came from the sale of travel insurance, the operation of Swiftcare emergency clinics and the sale of health cover to some 15,000 ex-pats. These people are insured with VHI but receive cover in the country they live in. Most of them are emigrants, but others have been posted in foreign countries by Irish companies.
Mr Moran said that almost €200m had been achieved in cost savings since 2009.
And consultants Milliman were again poring over the books to see if more savings could be made.
But he warned that plans by Health Minister Dr James Reilly to introduce legislation to impose further costs on insurers for using public hospitals would add €300m to the VHI's costs. The Government intends amending legislation so that health insurers are charged every time someone with private medical cover uses a public hospital.
At the moment charges are only imposed on insurers when someone who has insurance uses a designated private or semi-private bed in a public hospital. In December Mr Moran had said that premiums would rise by 50pc if the new system was introduced.
VHI has reserves of €295m, but it will need an extra cash injection of up to €250m to satisfy the Central Bank regulatory status being demanded by the European Commission.
The company said there has already been a 41pc rise in the cost of private beds in public hospitals since 2009.
It said the rates charged were set by the Department of Health and were not subject to negotiation. It has asked the Minister for Health to look at the issue.
Mr Moran said the company's business had been stabilised, despite a fall in members, people increasingly downgrading their cover and the increasing age of its customers.
He insisted that just less than 6c out of every €1 the company gathers in premiums for its core healthcare business was paid in administrative costs.
Mr Moran said he welcomed moves by the Government to introduce what he called a "robust risk equalisation" scheme for the healthcare market by 2013.
This would compensate companies that have older members, which are more costly. It would replace the temporary levy, which went up 40pc this year and is now €285 on every premium.