State-owned health insurer VHI recorded an after-tax surplus of €45.5 million in 2015, a reduction of €9 million on the previous year.
It closed the year with an improved reserves position of €521 million, up 12 per cent on 2014, while its membership increased for the first time in eight years to 1,068,000.
Its gross earned premium for 2015 totalled €1.428 billion, slightly down on the €1.451 billion it achieved in the previous year.
Total gross claims paid in 2015 came to €1.378 billion, up 10 per cent on a year earlier. The rise in claims costs reflected the full effect of significant increases in public hospital charges introduced by the Government in 2014, as well as other factors including “increased demand for treatment and procedures from our ageing membership”.
Some 926,000 claims were processed by VHI in 2015 with the highest expenditures being cancer and related care at €188.2 million, the heart and circulatory system at €159.8 million, and orthopaedic care at €147.3 million.
Investment revenue
Income from products other than its health insurance business amounted to €27.8 million, while revenue from investments at €5.5 million was down significantly on 2014 due to reduced bond yields.
Its solvency position was strengthened by raising €90 million in subordinated debt from Berkshire Hathaway.
Last year saw VHI Insurance DAC authorised as a non-life insurance company, and VHI Healthcare Ltd as an insurance intermediary by the Central Bank of Ireland.
The newly authorised entities commenced trading on July 31st. Securing authorisation placed VHI on the same regulatory footing as others operating in the market and “facilitated” its move into new markets such as life insurance, an offering it introduced in May 2016.
VHI chief executive John O’Dwyer said that being authorised in this way would enable the company to diversify into other areas of business.
Healthcare sustainability
However, Mr O’Dwyer expressed his “concerns” about the sustainability of Ireland’s healthcare model into the long term.
“The fact that people are now living longer with chronic diseases has major implications for the healthcare system as a whole but also for VHI, which has the largest share of older and sicker customers,” he said.
He noted that about one million people in Ireland will be aged 65 years or over in less than 20 years time, with the highest increase among those over 85 years old.
“There is an urgent need for policy makers, insurers and healthcare providers to work together to plan for the future and adapt our models of healthcare to tackle our ageing population,” Mr O’Dwyer said.
