VHI Healthcare has claimed its continued viability is at serious and urgent risk and it has issued a profit warning for the current year.
The insurer, which has more than 1.5 million subscribers, says there has been a dramatic fall in profits due to the absence of risk equalisation.
Risk equalisation is a system that would force rivals to pay subsidies to other insurance firms which have older, costlier members.
The VHI's annual report published today says that in the financial year ending February last, it paid out more than €750m in claims.
The surplus of €3.9m for the year represents a 94% reduction on the previous year's surplus.
The report includes a note from the VHI's auditors warning that, if it continues to dip into its reserves to fund the absence of risk equalisation, a situation would arise where the business could no longer be considered viable.
The Tánaiste and Minister for Health, Mary Harney, decided recently against the introduction of risk equalisation for the time being.
It would have meant rival Bupa Ireland having to pay the VHI an estimated €34m.
VHI Healthcare is seeking to increase subscription prices by 12.5% in September.
