CHIEF EXECUTIVE of the VHI Jimmy Tolan has resigned after a disagreement with Fine Gael Minister for Health Dr James Reilly over the future of the State’s largest private health insurer.

At a meeting with Dr Reilly yesterday, proposals for the break-up of the company were discussed after which Mr Tolan announced his intention to resign.

The company declined to give a reason for his resignation and would only say he now planned to return to the private sector. However, Dr Reilly suggested the outgoing chief executive took issue with some of the proposals for the company.

The Minster said it was well known he had commissioned a review of the VHI and how it might be handled into the future in terms of how the insurer will fit in with “our universal health insurance plans”. Dr Reilly said Goodbody’s were undertaking that and had all options open to them.

When asked if differences emerged between him and Mr Tolan concerning the company’s future, the Minister said it might be fair to say that he [Mr Tolan] might have had issues with some of the options under consideration and “he has made his decision, and I utterly respect that”.

It is understood that the central disagreement between the two men revolved around proposals to break up the company rather than to privatise it as a single entitiy.

Dr Reilly wants to create a situation which will facilitate the establishment of a universal health insurance programme and to do so believes there needs to be a greater number of competing insurers in the market which could be achieved through the break-up of the company.

The Minister expressed his gratitude to Mr Tolan and said that since he joined the insurer from Fyffes in 2008 on a basic salary of €297,000, he had “made some considerable progress in relation to controlling costs and changing the way the VHI provide care”.

VHI chairman Bernard Collins said it was “with regret” that the board had accepted Mr Tolan’s resignation.

He described the outgoing chief executive as outstanding, adding that he had concentrated on improving customer healthcare outcomes and also ensuring the long-term financial sustainability of the organisation .

Mr Collins said Mr Tolan had overseen a number of innovations including the adoption of a comprehensive strategy for the years ahead. The departing chief executive was at the centre of a storm at the beginning of the year when the VHI announced plans to increase the premiums by as much as 45 per cent.

The move was greeted with dismay by many of the companys 1.3 million subscribers.

Making the announcement, Mr Tolan described the health insurance market in the Republic as broken and said the increases were necessary because of a 21 per cent increase in the cost of beds in public hospitals, and because tax credits for over-65s were too low.