The Government has said it is reviewing the "corporate status" of the VHI in a development that could be a precursor to a privatisation of the State-owned health insurer.
A Department of Health spokesman confirmed that the "VHI Board Corporate Status Bill" was under preparation but he declined to say what that Bill would include.
"There will be legislation published later in the year as part of the Government's legislative programme to address the VHI's corporate status," he said.
While the VHI's ownership has been under scrutiny for some time, senior Government sources are known to have expressed concern that the rising trend in the cost of healthcare and the volatility in the market generally were such that the company's finances could not be guaranteed into the future.
While the sources said in the past that the Government would be obliged to step in with a rescue package in the event of a crisis even if the company had transferred to the private sector, the Bill now being prepared is known to include measures to reform the structure of the company's finances and its solvency provisions.
News of the department's preparation of the Bill emerged after the newest market entrant, Vivas, declared that it had complained to the European Commission's competition directorate general that the VHI enjoyed "unfair advantages" in the market.
Vivas chief executive Oliver Tattan said the commission had informed him that it had initiated an investigation on foot of the complaint, although a commission spokesman was unable to verify that last night.
Vivas, backed by businessman Dermot Desmond, said the VHI enjoyed huge structural advantages over rivals because it was able to develop lines of business to sell a range of products from bubble bath to travel insurance.
Mr Tattan, a former VHI chief executive, said the VHI was offering discounts on travel insurance to its own customers but not to non-customers and said this amounted to a "tie-in". Vivas was not allowed to offer such promotions, he said.
He complained that the VHI was subject to Irish Financial Services Regulatory Authority (Ifsra) rules and said Ifsra's regulation of his company restricted the scope of its business.
VHI chief executive Vincent Sheridan rubbished the complaint as an attempt to get publicity and said VHI faced more burdens than Vivas under regulation by the Department of Health.
"It's great to see a competitor complaining about our innovation," he said.
