Competition in the Irish Private Health Insurance Market

4.6 Aspects of the exemption from insurance regulation offer Vhi
Healthcare a competitive advantage but aspects of the VHI Acts restrict
its room for commercial innovation. The main substantial advantage
that the different regulatory regime offers is the exemption from EU
solvency requirements.
4.7 The varied prudential regulatory regimes to which the PHI firms are
subject create an uneven playing field. In order for competition to work
well, the playing field needs to be levelled by the least intrusive means
possible in the shortest timeframe possible. Competition in the PHI
market will be improved by ensuring that all players in the market fall
under the same prudential regulatory regime, subject to the
requirements of EU legislation. 39 Differences in regulatory coverage
and oversight should be addressed. The remainder of this chapter
details ways in which this goal should be accomplished.
EU Non-Life Insurance Directives
4.8 The EU has adopted three Directives governing the provision and
authorisation of Non-Life Insurance, including private health insurance.
These non-life Directives were adopted in 1973, 1988 and 1992.
4.9 Inter alia, Vhi Healthcare is exempted from the following requirements
of the First Non-Life Insurance Directive (as amended):
• Receiving official authorisation from the competent authorities prior
to commencement of operations (Art. 6);
• Taking the form of an incorporated company limited by shares or
by guarantee or unlimited (Art. 8);
• Limiting its operations to the business of insurance, excluding all
other commercial business (Art. 8(1)(b));
• Possessing a minimum guarantee fund (Art. 8(1)(d)) or
establishing and retaining a minimum guarantee fund (Art. 17b);
• Providing a scheme of operations and proof of solvency margin to
the competent authorities when seeking authorisation to extend
business to other classes of insurance (Art. 8(2));
• Submitting to financial supervision (Arts. 13, 19 and 22); and
• Retaining a solvency margin at least equal to that provided for in
the Directive (Art. 16).
4.10 Vhi Healthcare also is exempted from the following requirements of the
Third Non-Life Insurance Directive:
• Informing competent authorities of any proposals to take a
qualifying holding in an insurance undertaking (Art. 15)
• That equalisation reserves be denominated in assets of specified
forms (Art. 21)
39 Whereby PHI firms may be authorised as insurance undertakings in their home member state and
operate in other member states
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