Health cover premiums will increase in September despite the Government's refusal to allow VHI a 9 per cent increase. Minister for Health, Mr Martin, denied the increase to keep the inflation level down.

VHI has defended its submission based on rising medical inflation which is averaging seven to 12 per cent internationally.

The health insurer also cites its increasing number of older members and the greater demand for medical services.

VHI has been asked to resubmit for a smaller increase and it is likely that the reduced rate will be allowed. Over the last few years an increase of 9 per cent was approved without difficulty. The approved rate is expected to be between 4 and 5 per cent.

Competitor BUPA is expected to raise rates, as usual, in the spring.