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Brussels, 27 November 2008

Insurance: Commission continues its scrutiny of the exemption of Irish Voluntary Health Insurance Board (VHI) from EU rules

The European Commission has decided to send Ireland a final request to eliminate the exemption of the Irish Voluntary Health Insurance Board (VHI) from certain EU rules on non-life insurance. This follows a complaint to the Commission alleging that the VHI is unlawfully pursuing insurance activities without being subject to the First Non-Life Insurance Directive in particular. The Commission's request takes the form of a "complementary reasoned opinion", which follows the "reasoned opinion" previously sent by the Commission. Ireland is now, once again, asked to establish compliance with EU law. If there is no satisfactory reply within two months, the Commission may decide to refer the case to the European Court of Justice.

The European insurance sector has been subject to substantial harmonisation. For non-life insurance, the basic legal act is Directive 73/239/EEC (the First Non-life Directive), as amended and supplemented.

When work on that Directive was initiated in the 1960's, it was considered necessary to exclude certain public or semi-public monopoly institutions providing, health or fire insurance in particular from the scope of application of the Directive, and consequently from all subsequent amendments. Accordingly, Article 4 of the Directive exempted the VHI, among other institutions, from the rules of the Directive. The listed undertakings are not subject to the Directive "unless their statutes or the law are amended as regards capacity".

Undertakings that are not exempted, or can no longer be considered to be exempted from the scope of application of the Directive, must comply with the relevant Non-Life Directives. In light of the Irish government's observations on the "reasoned opinion" and given that new Irish legislation on VHI entering into force before last summer has in effect still not removed VHI's exemption, the Commission has concluded that Ireland is still in breach of its obligations under EU law with regard to the scope and to the supervision of VHI's operations.

The VHI is mainly regulated by the Voluntary Health Insurance Act of 1957 which sets out the statutory capacity of the VHI. The Commission takes the position that the VHI of today differs considerably in terms of membership and activities from the VHI of 1973 when the exemption was granted. It is clear from the number of amendments to the relevant legislation introduced in 1996, 1998 and 2001 that the capacity of the VHI has changed significantly.

For these reasons, the Commission has taken the view that the exemption from the scope of the application of the First Non-Life Insurance Directive is no longer valid. Thus, the VHI has to be made subject to the provisions of EU non-life insurance legislation and hence be subject to the same regulatory framework as other operators on the market.

Accordingly, the Commission has now requested Ireland to take the necessary measures to comply with its observations within two months.

The latest information on infringement proceedings concerning all Member States can be found at:

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