VHI Healthcare, the State-owned health insurer, is to start selling annual travel insurance cover as it moves to diversify its product range beyond the saturated health insurance market.

However, VHI chief executive Mr Vincent Sheridan warned yesterday that the insurer would have to be incorporated before it could expand into other markets.

Mr Sheridan said travel insurance was a natural extension of VHI's core private health insurance plans, under which its 1.55 million members already receive cover for emergency medical expenses incurred overseas.

The cover included in VHI's most popular healthcare plans is limited to €100,000 - not enough to pay for hospital operations in countries such as the US. As a result, many of VHI's members buy separate travel policies.

As a portion of the medical expenses cover is already included in VHI's healthcare premiums, it is able to offer the most competitive prices in the travel insurance market, VHI said.

The multi-trip policy costs €49 for an individual, €69 for a couple and €95 for a family. It is available only to VHI members under 65 years of age. Unlike other travel insurers, VHI will cover people with pre-existing conditions.

VHI will launch a dental insurance product in April as part of a joint venture with US firm DeCare International.

Mr Sheridan said travel and dental insurance were obvious sectors for VHI to enter, but that launching any other products such as serious illness insurance would be "very difficult" unless it was incorporated.

VHI must receive approval from the Government for each new product. An attempt to enter the market for Personal Retirement Savings Accounts was frustrated last year by the narrow statutory definition of its role.

The Government is due to address the VHI's corporate structure in the Dáil by the end of April.