Several Irish advisory firms are chasing the contract to advise the new government on the sale of state owned health insurer VHI.
The consultants asked to advise on the sale of VHI, will also have to suggest ways risk equalisation may evolve in Ireland so that there is a rebalancing of the risk in the market among private health insurers who currently subsidise VHI".
Splitting up VHI into different companies with different types of customers is one option. The previous administration and the insurer have been dragging their feet on the EU demands that VHI be removed from state control and complies with the financial and legal rules that every other insurer in the EU has to obey to be authorized to remain in business.
VHI is facing a range of challenges because of its older customers, who are using the health service more and getting more complex procedures every year. The company is not meeting the solvency rules of the Financial Regulator.
Whether the new government is prepared to subsidise the insurer so that it is solvent before a sale or privatization is as yet unknown. The change of government has shattered the cozy club that existed between ministers, banks, insurers and property developers –that oversaw Ireland descend from one of the most prosperous countries to one of the weakest.
One option under consideration is to copy the Netherlands and force everyone to buy insurance from a range of companies all offering the same price and terms, and allow VHI to be run down and close.