EU COMMISSIONER Charlie McCreevy has sharply criticised the Government’s decision to further postpone a long-planned reform of the State health insurer, the VHI.
In a letter to Minister for Health Mary Harney, one of his closest political allies when they served in cabinet together, Mr McCreevy says he is beginning to doubt the Government will ever fulfil its legal obligation to bring the VHI within the remit of the Financial Regulator.
Mr McCreevy will shortly complete his term as the EU’s internal market commissioner.
It emerged in late December that Ms Harney had signed an order setting a new deadline of March 31st for the VHI to accrue the capital reserves it requires for regulation by the Financial Regulator.
The European Commission had already decided to refer Ireland to the European Court of Justice over its failure to implement an adequate regulatory regime to oversee the insurer.
The VHI’s status as an insurer not authorised by regulators is regarded as a clear market distortion because the organisation does not have to operate under the same rules as rival insurers.
In his letter to Ms Harney last week, Mr McCreevy referred to “recent press comment that the Irish authorities intend to postpone and thereby further delay the proposed formal regulation of the VHI by the Irish Financial Services Regulatory Authority.
“I am very concerned by this latest development, which if I am not mistaken represents the fourth such extension since the original date for regulation expired on December 31st, 2008.
“Further, in view of Ireland’s unfulfilled promises and assurances to date in this matter, I am beginning to doubt whether the VHI will ever be regulated.”
Mr McCreevy told the Minister the file in the European Court of Justice case was due to be lodged before the weekend. “I would like to take this opportunity to reiterate my firm expectation that the Irish authorities will, without any further unnecessary delay, take full cognisance of their obligations under community law.”
Ms Harney said last year the Government was addressing the issue of creating a level playing pitch for all health insurers and ending the VHI’s special derogation. Such a move would lead to an obligation on the VHI to bring its reserves up to 40 per cent of premium income.