Losses for VHI Healthcare plunged to €3.1m in 2010 from €41.7m in 2009
By Finfacts Team
Apr 14, 2011 - 4:46 PM

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Losses for VHI Healthcare plunged to €3.1m in 2010, compared with €41.7m in 2009. The insurer expects to have 280,000 additional members over the age of sixty five in next ten years.

In 2010, The State insurer spent €1.307bn on the healthcare needs of its customers. This figure is down almost 1.4% on the previous year, principally because of reductions in rates per procedure paid to private hospitals (3%) and consultant fees (5% with effect from July 09 and a further 10% with effect from July 10) and the fact that there was no increase in the cost of private beds in public hospitals in 2010.  While the total healthcare expenditure is down, the healthcare delivered increased by 8% and the average healthcare spend per customer was €935 compared to €905 in 2009.

Jimmy Tolan, Chief Executive, Vhi Healthcare, stated “While the financial performance in 2010 was an improvement on 2009, we still incurred significant underwriting losses of €25 million and we still have to improve our annual performance by €60m in order to fund our customers’ healthcare needs and also to meet the requirements of the Central Bank and European Commission in due course.” 

  •  Earned premium for the twelve months to 31st December 2010 came to €1.335 billion, up 1.6% on premium income earned of €1.314 billion the previous year.

  •  Vhi Healthcare’s claims ratio of 95.1% (versus 98.7% in 2009) means that of every €100 received in premium income, over €95 pays for the medical care needs of customers. This ratio is significantly higher than those of competitors.

  •  Operating expenses at €90.3 million were 2.2% below 2009 which itself was 9% below 2008.  Vhi Healthcare’s operating expenses as a percentage of premium income are significantly lower than competitors.

  • Vhi Healthcare also reported a solvency ratio (the ratio of free reserves to premium income) of 22.8%, slight increase from 2009.  Vhi Healthcare had reserves of €308 million at year end, considerably higher than any other health insurer in Ireland.

In 2010 Vhi Healthcare spent €1.3 billion in funding the healthcare needs of customers. The most significant healthcare expenditure in 2010 was for treatment of the following conditions:

  1. Cancer & related care - €227.9 million
  2. Orthopaedic care (including hip replacements etc) - €168.4 million
  3. Heart & circulatory system - €160.3 million
  4. Digestive System - €122.8 million
  5. Investigation of undefined conditions, symptoms - €107.8 million

Cancer care represents the biggest expenditure area for Vhi Healthcare. The  top three healthcare expenditure areas for cancer-related care are in breast cancer, colorectal cancer and prostate cancer which accounted for approximately 46% of total spend on cancer care.

 Vhi said it insured 85% of customers over the age of sixty at the year end and as part of the future roadmap for the health insurance sector the previous Government committed to introducing comprehensive measures to protect older members of society.  To date these measures have yet to be implemented and Vhi Healthcare believes that it will be necessary to significantly increase the tax credits for older members of society in order to remove the current incentives in the health insurance market to pursue younger lives and avoid insuring older lives.  Tax credits are the only mechanism currently available to ensure a proper community rated market place but they need to be increased to fully protect older members of society.

The insurer said the increase in tax credits would require the levy payable by health insurance companies for adults who renew with them to increase from €205 to €295.  The current system is only 55% effective and the increase in the levy to €295 would ensure that it is 100% effective and would protect older members of society.  



Age Related TRS


Age Related TRS*

60 – 69



70 – 79



80 +



* Tax Relief at Source

Vhi Healthcare said it anticipates that 2011 will be a challenging year, particularly in light of the recent increase of 21% on private beds in public hospitals and the fact that the current levy/age related tax relief system is only 55% effective which meant that Vhi Healthcare faced losses of €147m on older members prior to the recent price increases. 

According to Jimmy Tolan, “Vhi Healthcare has to achieve financial sustainability regardless of the effectiveness of the age related tax credit system but it is our profound wish that we will finally see a proper community rated market place in 2012 which is some twenty years after the commencement of deliberations on the need for a risk equalisation scheme”. 

The insurer said that over the last five years the total number of medical procedures which Vhi Healthcare has paid for on behalf of its customers in private facilities has increased from 293,000 procedures to 507,000 procedures which is an increase of 73% and it expects this to increase by a further 9% in the year ahead.

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