The VHI is in talks with the Government on providing services such as life assurance and pension cover as part of a plan to radically expand the company's activities.
The State-owned health insurance firm, which has 1.6 million subscribers, says it needs to diversify its business once it is restructured as a commercial company.
The entrance of the company into the wider insurance market would provide a boost to the Government's plans to attract further competition into an industry saddled with high premiums.
The company's chief executive, Mr Vincent Sheridan, has confirmed that it is examining a number of expansion plans but said they could not be progressed until the VHI's corporate status had changed.
VHI officials have been examining the possibility of providing a range of pension products, including PRSAs, and other insurance products such as life assurance. However, it has ruled out getting involved in what it sees as high-risk products, such as motor insurance.
It is also looking at expanding within the area of health, such as dental health insurance, which would be available in the same way as customers can now buy health insurance cover.
The Government has committed itself to giving the State-owned insurance company greater commercial freedom, but is currently deciding whether to fully privatise the firm or change it to a semi-State company.
In a document on health insurance reform published in 1999, the Government announced that it would introduce legislation allowing for the full sale of the VHI or third-party investment.
It also accepted the need to allow the VHI to diversify its business if it was to continue expanding, due to its dominant role in the health insurance market.
Despite the introduction of competition several years ago, the State insurance firm still holds almost 90 per cent of the health insurance market, and experts say there is very limited potential for further growth in this market for the VHI.
Mr Sheridan said he hoped the Government would be in a position to decide the VHI's commercial future as soon as possible.
He said that while outside experts from AIB and the stockbroking firm Davys had both concluded that privatisation was the best way forward, there were other options that could be examined.
"We're not calling for privatisation, although we have passed on AIB's findings to the Government. There are various options, and perhaps one is to establish the VHI as a semi-State company and give us greater commercial freedom," he said.
He also reiterated the need to introduce risk equalisation, aimed at protecting the community rating structure, which would see insurance firms such as VHI compensated because of the older age profile of their policyholders.
