State-owned health insurer VHI has reported a €65 million deficit for the 10-month period ending December 2008, compared to a surplus of €63 million for the year to February 2008.
In its annual report published today VHI said the deficit was because it paid out almost €30 million more than it received in premium income, coupled with losses of €43 million in its investment portfolio.
The insurer said it paid out €981 million in claims last year, a rise of 17 per cent, due to a significant increase in the number of medical procedures being paid for.
VHI said it paid out an average of €775 per customer last year.
The ratio of reserves to premium income, or solvency ratio, stands at 27.7 per cent with VHI saying this means it is “well capitalised and financially strong”. The unsurer's underwriting margin was -3.1 per cent compared to 4.9 per cent in 2007.
Premium income for the ten months to December 31st was €1.02 billion, down €1.15 billion during the pervious year, although this was on a 12-month basis.
Jimmy Tolan, chief executive, said the company was spending an extra €3.3 million a week compared to the same period last year.
"The cost of providing high quality medical care continues to increase year on year - a factor of ongoing improvements in technologies, treatment and drugs."
He said the main reason for cost increases was the “number of procedures for which our customers are treated”.
The number of medical procedures which VHI customers accessed in private hospitals increased 14 per cent in 2008 compared to 2007, he said, despite the shorter year.
Mr Tolan said the company expected to spend more than 95 per cent of premium income this year on meeting claims, and he said this was “significantly higher than the market average”.
He added that medical conditions from “lifestyle diseases” represent one of the greatest healthcare challenges” facing the State.
