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European Commission

Press release

Brussels, 25 July 2012

State Aid: Commission requests Ireland to end unlimited guarantee for Voluntary Health Insurance Board (VHI)

The European Commission has proposed appropriate measures to Ireland under EU state aid rules to abolish the unlimited state guarantee enjoyed by the Voluntary Health Insurance Board (VHI) by the end of 2013. VHI is a statutory body offering voluntary health insurance. Its statute does not provide for liquidation or winding up, with the consequence that VHI cannot go bankrupt. As a result, its creditworthiness is improved, providing VHI with an undue financial advantage over its competitors. If no agreement is reached on the proposed measures within one month, the Commission may open a state aid investigation.

Commission Vice President in charge of competition policy Joaquín Almunia said: “A level playing field on the Irish market for Private Medical Insurance can only exist if all operators compete on equal market terms. The removal of the unlimited State guarantee to the Voluntary Health Insurance Board is essential to ensure that competition on this market takes place on the operators' own merits.

In response to concerns raised by the Commission regarding the distortions of competition created by the unlimited guarantee, Ireland undertook to abolish its effects. To ensure its effective repeal, the Commission requested Ireland in particular to:

(i) progressively incorporate one or several subsidiaries of VHI as private limited companies, which would take over all of VHI's economic activities by 31 December 2013 at the latest and would be governed by the common Irish company law;

(ii) ensure that, whatever the final structure and sequencing of the implementation of the appropriate measures, the effective removal of the unlimited guarantee is completed by 31 December 2013.

The unlimited guarantee deriving from VHI's legal form as a statutory body would thus cease to benefit an economic activity and therefor no longer raise state aid concerns.


The Voluntary Health Insurance Board was set up in 1957 as a statutory body, with the aim of offering voluntary health insurance, and is governed by the Voluntary Health Insurance Act 1957. By virtue of this status, VHI cannot be forced into bankruptcy. As a consequence, it is able to get loans on preferential terms and its business partners need not be concerned with VHI’s ability to perform its obligations, as its credit or commercial risks are borne by the State. The relevant provisions remained in place after the opening up to competition of the Irish market for private medical insurance in 1994. This provides VHI with an undue advantage over its competitors.

The non-confidential version of the decision will be made available under the case number SA.18879 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

Contacts :

Antoine Colombani (+32 2 297 45 13)

Marisa Gonzalez Iglesias (+32 2 295 19 25)

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