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Brussels, 25 June 2009

Insurance: Commission refers Ireland to Court of Justice over exemption of Irish Voluntary Health Insurance Board (VHI) from EU rules

The European Commission has decided to refer Ireland to the European Court of Justice over the exemption of the Irish Voluntary Health Insurance Board (VHI) from certain EU rules on non-life insurance. The referral follows the "complementary reasoned opinion" sent to Ireland in November 2008 ( IP/08/1787 ), which requested Ireland once again to establish compliance with EU law. 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 considers that, due to the significant changes that have occurred in its business model, the VHI has lost its entitlement to remain exempt from the general insurance supervisory regime, and in particular the exemption which was originally granted under the First and Third Non-Life Insurance Directives. In the past these exemptions meant the VHI was discharged from certain obligations, including those concerning the legal form that needed to be adopted by companies offering non-life insurance services, the amount of the minimum guarantee fund and the solvency levels that are normally required for every insurance undertaking operating in the EU and the European Economic Area.

In its reply to the Commission, the Irish government suggests that it has complied with the above mentioned Directives through the enactment of the Voluntary Health Insurance (Amendment) Act 2008. The government also emphasises that, following the act, the VHI exemption will end and that the VHI will be subject to the standard regulatory framework. Further, that Ministerial Orders had moved the obligation to 31 st March 2009 and 1 st September 2009 respectively.

For these reasons, the Commission maintains that the Irish authorities have not put an end to the infringements of the Non-life Insurance Directives.


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.

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 also clear from the number of amendments to the relevant legislation introduced in 1996, 1998, 2001 and 2008 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.

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

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