Health insurer VHI has notified the Department of Health of its intention to raise the price of subscriptions by 12.5 per cent after it announced losses of €32 million.
The accounts report a loss of €32.3 million after tax compared to a surplus of €3.9 million in the previous year. VHI put the loss down to the absence of risk equalisation in the community-rated health insurance market.
Minister for Health Mary Harney last year introduced risk equalisation, which seeks to compensate insurance companies carrying a disproportionate percentage of high-risk persons on their books.
However, the decision was immediately challenged in the High Court and a judgment is awaited.
Bupa, the main competitor to VHI in Ireland, has claimed that it will face risk equalisation payments worth €161 million over three years under the scheme.
Vincent Sheridan, VHI's chief executive, said: "It is extremely frustrating to incur financial losses in a year which was particularly successful in terms of innovation, new product development, membership growth and a further reduction in our operating cost ratio.
"The loss of €32 million arises from our commitment to members to apply a community rated premium in a community rated market."
He described risk equalisation with as a very positive development for the health insurance market.
VHI plans an increase of 12.5 per cent on its hospital Plans A-E, Options Plans A-E and Life Stage Choices Plans from September 1st.