The European Court of Justice has found that Ireland is in breach of its EU obligations by exempting VHI Healthcare from being regulated by the Central Bank.
This means that around €300m may have to be found to ensure the VHI has minimum reserves, which other non-life insurers are required to have.
Under a change of regulation, VHI would have to show the Central Bank it has a robust three-year business plan and necessary levels of capital. It is not in a position to satisfy these requirements.
In response, Health Minister Dr James Reilly said it was known for some time any judgment from the court would have implications for the future of the VHI. Minister Reilly said he would bring proposals to Government to deal with the regulatory issues that arise. He said that the VHI can continue to trade and pay claims as normal.
VHI said the judgment was not unexpected, adding that it was a strategic imperative that it was regulated by the Central Bank in the interests of its customers.
The last government had planned to sell the VHI, but the current government wants to keep it in public ownership, although it may be broken up as part of the plans for universal health insurance.
