VHI Healthcare said it will have to increase its premiums by at least 6% to 7% for the next ten years to keep up with the increasing health needs of its customers.
Launching VHI's Annual Report for 2009, chief executive Jimmy Tolan said the company lost 120,000 customers last year.
The health insurer has reported a loss of €41.7m after tax for last year. This compared with a deficit of €65m for the ten months to the end of 2008.
Premium income jumped by just over 6.8% to €1.3 billion, but VHI spent more than €1.34 billion on claims, up 14% on the previous period.
The cost of running the VHI as a percentage of premiums earned fell from 7.6% to 6.4%. Its solvency ratio - the ratio of reserves to income from premiums - stood at 22.3%, down from 27.7% last year.
VHI said it was looking at its options in order to meet its legal obligations to ensure that its income at least matches its spending in 2011.
VHI said it was currently losing €170m a year in meeting the healthcare needs of its older customers. It claimed the current mechanism to protect older health insurance customers was 'only 40% effective' and needed to be strengthened.
In May, the Government announced plans for the eventual sale of the VHI. Mr Tolan said today that this could be a long and complex process, taking up to two years to complete. Before its sale, the State is to make a substantial capital investment in VHI to help it attain the solvency levels that apply to other insurers.
The Government has said the sale of VHI is to coincide with the full introduction of a new risk equalisation scheme. The scheme will start on a transitional basis in 2012 before taking full effect in 2013.
