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VHI follows fee hike with €54m profit

VHI Healthcare, which increased premiums by an average of 6pc earlier this year, has announced a surplus of over €54m for 2012.

The company said, however, that its private health insurance division recorded a loss of €7.2m for the same period. This was offset by profits made in its dental, travel and international business.

The private health insurer, which has had five price rises in two years, said the overall surplus was achieved after a once-off credit of €38m from ending certain retirement benefits for staff.

It is blaming the loss in its private health insurance division on its ageing customer profile and the lack of an effective risk equalisation scheme. Claims rose by 13pc last year, it says, because of a big increase in medical procedures and the ageing profile of its customers.


The insurer says for it to become a commercially viable regulated insurer, it will need to make a surplus each year of at least €60m and to do this it will need a capital injection and an effective risk equalisation scheme.

Chief executive John O'Dwyer said the company was committed to introducing radical cost-cutting measures to rebalance the cost structure in the health system and had saved €100m last year.

He said the company was hopeful of a positive outcome in negotiations with the Department of Health over charges to insurers for the use of public beds. But, he added: "It is a very, very worrying situation for VHI and other insurers. We see it as a double taxation." Costs had already been reduced impressively for major surgeries.

"Consultant rates are back to 2004 levels. Procedure pricing for hip replacements is down from 14 days to seven days. Knee replacements have been halved. Stents had a charge of €1,000; its now down to €200."

The insurer had 1.16 million customers last year which was a drop from 1.22 million the previous year. Total premium income for last year was up 9pc to €1.43bn.