The VHI wants to increase the cost of its private health insurance premiums again this year and has sought the Minister for Health's approval to raise the price of all its main plans by 3.8 per cent from September.

It hopes to increase the cost of its hospital A to E plans by 3.8 per cent and the cost of its Option plans by 2.5 per cent.

There is no indication yet of how the Minister for Health, Mr Martin, will react to yesterday's request.

However, given that he has approved VHI applications for price increases of 8.5 per cent and 18 per cent respectively over the past two years, its unlikely he will refuse this latest application.

A spokeswoman for Mr Martin said he would be examining the application and planned to meet the VHI soon to discuss it.

The VHI's chief executive, Mr Vincent Sheridan, said the increases sought were significantly less than in previous years and significantly less than the rate of increase in the cost of medical care which is currently running at over 10 per cent per annum.

Nonetheless the proposed increase was criticised by Fine Gael's health spokeswoman, Ms Olivia Mitchell.

She said it was difficult for the VHI to justify a price increase when it made a profit of €34 million in the 12 months to the end of February 2003. Mr Sheridan said the increase would only be used to finance new benefits and services for members.

These new services would include cover at a new private hospital in Galway, enhanced maternity benefits and increases in MRI benefits.

"There is no provision in this price increase for the other drivers of medical cost inflation such as increases in the volume of medical procedures, new developments in drugs and medical technology, and other cost increases including wages, insurance, waste disposal and accreditation," he said.

The board of the VHI had decided to protect its members from the recent Health Insurance Authority ruling that risk equalisation should not be introduced for the time being and was therefore not passing on to them the usual higher price increases.

It would bear the cost of financing community rating, some €25 million a year, from its own reserves, he added. The VHI paid out almost €660 million to cover benefits provided to members last year.

Its only competitor, BUPA Ireland increases its prices every March.

It imposed an eight per cent price increase last March.

Meanwhile Mr Sheridan indicated the VHI's financial accounts for the year to the end of February 2004, to be published shortly, will show very positive results.