VHI, THE State-owned health insurer which the Government has said it intends to sell, has declined to hand over customer-sensitive information to actuarial consultants assessing the cost of its claims for the Department of Health.

Consultants from US actuarial firm Milliman asked for details on the health insurer’s customers and their medical history for five years as part of their financial review for the department.

VHI declined the request but instead offered to provide more general information in response to refined queries to ensure the protection of customer data. This has led to a delay in the completion of the consultants’ report.

A spokesman for the department said that the consultants have been asked to examine VHI’s claims costs and how they have increased over recent years.

“A clear picture of the engines that drive those costs would be useful,” he said, as the Government has committed itself to the sale of VHI and to recapitalise the insurer.

The department expects an interim report from Milliman shortly and the final report to be submitted next month, he said.

The Government plans to invest up to €300 million to raise VHI’s solvency ratios to EU levels and to secure approval from the Financial Regulator before putting the health insurer on the market.

The sale of the VHI is expected to take place in 2012 or 2013.

VHI is believed to have asked the Health Insurance Authority, the regulator of the sector, to carry out an industry-wide review to verify the insurer’s claim that it was losing younger, more profitable customers to rivals Quinn and Aviva but the authority declined.

The department has instead retained Milliman to carry out an assessment of the health status of VHI customers but it cannot review the two other private firms.

VHI has warned that the loss of more profitable, younger members to competitors will lead to a risk-based market where older customers would be charged higher premiums due to their higher risk.

This would undermine the Government’s strategy to maintain so-called community rating where the price of insurance is not determined by the age or the medical history of the insured person.

VHI insures much older customers than its rivals, covering 94 per cent of the over-80s private health insurance market and close to 90 per cent of those over 70.

The company is pushing for the Government’s health insurance levy – paid by VHI’s rivals to fund a tax-relief scheme subsidising the insurance of older customers – to be doubled pending the sale.

Should Milliman’s findings back VHI’s claims that it has lost younger customers to rivals, the insurer is likely to press for an increase in the Government levy.

Seattle-based Milliman owns Dublin actuarial firm Life Strategies but the VHI review is being carried out by it US consultants.

The Minister for Health Mary Harney said at the announcement of the Government’s plans to sell VHI in May that financial experts would be hired to carry out due diligence and to advise on the level of capital that the insurer requires.