VHI Healthcare has claimed that its continued viability is now at 'serious and urgent risk' and has issued a profit warning for the current year.
The insurer, which has over 1.5 million subscribers, says there has been a dramatic fall in profits due to the absence of risk equalisation - a system to force rivals to pay subsidies to other insurance firms which have more older, costlier members.
The VHI's annual report published today says that in the financial year ending February last, it paid out over €750m in claims. A surplus of €3.9m for the year represents a 94% reduction on the previous year's figure.
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 Tanaiste 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's being forced to pay the VHI an estimated €34m.
The VHI has also blamed increased costs on charges for private beds in public hospitals, introduced by the Department of Health, and increased fees for hospital consultants. It is seeking to increase subscriptions by 12.5% in September.
