Ireland's European Commissioner Charlie McCreevy has rejected the Government's defence of VHI over the question of whether or not it has an unfair advantage in the Irish health insurance market.
Mr McCreevy said the Government's explanation of VHI's exemption from solvency requirements was not convincing and simply re-stated an earlier position.
The Commission took legal action against Ireland following a complaint from Vivas. The company claimed that VHI's exemption from needing a certain level of capital reserves discriminated against newcomers to the market.
Mr McCreevy also said he would have comments to make to the Government over its proposed legislation on VHI. The Government will be given a final chance to explain VHI's position regarding solvency before the Internal Market Commissioner brings the case to the European Court of Justice.
Other health insurance companies must prove they have capital reserves of 40% before they can enter the Irish market. But VHI has an exemption which dates back to Ireland's admission to the then EEC. That exemption was conditional on the company's sticking to its core business.
The core of Vivas's complaint is that VHI has moved into other activities like travel insurance and online retail business, thereby breaching the conditions which govern the exemption.
