VHI Healthcare has said it plans to increase subscriptions for its 1.5 million members by an average 12.5% across all its plans from September and has notified the Tanaiste of its intentions.
The insurance firm says it lost over €32m in the year to February 2005, after a surplus of €4m the previous year.
The company has blamed the absence of Risk Equalisation in the health insurance market for its loss. Risk Equalisation is a system under which rival insurers would compensate the VHI for having a greater number of older and more expensive high risk members.
The Government decided to introduce the scheme from January. The outcome of a High Court challenge by Bupa Ireland to the introduction of risk equalisation is awaited.
'It is extremely frustrating to incur financial losses in a year which was particularly successful in terms of innovation, new product development, membership growth and a further reduction in our operating cost ratio,' commented VHI's CEO Vincent Sheridan.
He said that when introduced, Risk Equalisation will pave the way for genuine competition across all sectors and age profiles within the market. VHI says that it takes the premium from seven 25-year-olds to pay the claims of one 70 year old and adds that it has 95% of that age group in the market.
During 2005, VHI paid out medical claims worth €892m, up from €806 the previous year. It paid €139m towards the treatment of cancer, up 127% on five years ago when the payout was €61.2m. €116m was spent on the treatment of heart or other circulatory problems and €90m on problems affecting mobility.
