VHI board urged to end contract of managing director

A REPORT to be considered by the VHI board tomorrow recommends that the contract of managing director, Mr Brian Duncan, be terminated. The report was drawn, up by a four person board sub-committee. It results from significant tensions which have emerged in recent months between the managing director and the board of the state owned health insurance company.

It is not clear if a decision on the matter will be reached at tomorrow's meeting. However, the conclusion of the report is the clearest sign yet of the extent of differences between the board and Mr Duncan. Among the issues which have caused disagreement are the role of another senior executive in the company and the handling of disputes with hospitals and consultants.

The board sub-committee was established in June, shortly after the appointment of seven new members. It was asked to examine the role, duties and function of the managing director and the board and certain specific issues in this area. It is understood that this report has just been completed. The company would make no comment last night.

The board is chaired by Mr Noel Hanlon, although he was not a member of the sub-committee whose report will be considered on Thursday.

Tensions have been building in the organisation as it prepares to meet competition for the first time. BUPA, the giant British company, will shortly be offering health insurance policies to the Irish market.

The VHI has also been heavily criticised for regular increases in its premiums in excess of the rate of inflation.

Some members of the board are understood to feel that new approaches are needed to prepare for the onset of competition and to improve the company's financial position. A key problem is that improvements in medical technology are pushing up costs and feeding through to higher premiums.

Mr Duncan joined the VHI from Irish Life two years ago. He had worked in Irish Life for 20 years and was one of the company's most senior executives.