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Bulgarian companies are "embarrassing" the Greek insurance market

22 February 2013 / 19:02:58  GRReporter
4563 reads

Victoria Mindova

The Greek press warned a week ago that the local market was flooded with foreign "pirate" insurance companies. They offer dumping prices, which do not meet the services they render and unsuspecting customers may become victims of fraud. Some of the companies are registered in Bulgaria as reported by Ethnos newspaper, but their names are not mentioned.

More than 700 thousand car owners are the victims of such companies. They offer third party liability auto insurances at 230 euro per year, which is considered a serious undercutting of the market price. The "intruders" set off to the Greek market after the introduction of the European Union regulations on the liberalization of insurance markets in the European Union. These changes have enabled companies registered abroad to operate in other European Union countries but only the country where they are originally registered can exercise control over them.

The lack of specific information on which these "pirate" companies are and what their market share is has driven GRReporter to contact Konstantinos Bertsias, who is in charge of the auto insurance department at the Greek Association of Insurance Companies. We presented the issues raised in the Greek media to him and he gave a very different picture of the situation.

"The information that 700 thousand vehicles are insured with foreign companies offering dumping prices is quite exaggerated," said the specialist. The average value of an insurance policy in the country for one year is around 300 euro. He confirms that foreign companies in Greece are allowed to insure vehicles with local registration, but their market share is very small.

"With the deepening effects of the economic crisis, an increasing number of car owners avoid taking out compulsory insurance. Their number now exceeds one million, but I must say that the problem of uninsured cars is traditional for the country," adds Bertsias. However, the insurer states that local companies are not afraid of foreign competition, which may attract a larger market share with lower prices. "If the companies are in order and meet the requirements, there is no reason for them not to work in the local market".

According to Konstantinos Bertsias, the most common mistake of foreign insurance companies is that they do not carry out detailed research on the local market. They start offering insurance services at lower prices to attract customers. Then, they see the losses and withdraw. "If the companies are correct, conduct good market research and comply with the law, we have no problem accepting foreign companies in the local market. It even extends the market, improves the competition and brings new techniques and knowledge," says the specialist.

The only signal, which the Greek Association of Insurance Companies has received for a Bulgarian company operating in Greece without the proper permission, was for General Commodities Trade Ltd.  The Bank of Greece, which is the supervisory body of the insurance market, had sent a notification letter to the Association, informing it that the relevant company had been operating in the country without the required permission. Konstantinos Bertsias sent a confirmation copy of the notification letter from the Bank of Greece.

The company General Commodities Trade Ltd. has attracted our attention. GRReporter sought the assistance of the financial supervision commission not only to comment on the Bulgarian presence in the Greek insurance market, but also to find out what the available data on General Commodities Ltd. are and whether there have been registered complaints of violations made by it so far. After a series of phone calls and promises that the commission would assist in the investigation, GRReporter is still awaiting a response from the supervisory authority. The initial contact with the commission was made 10 days ago.

Tags: EconomyMarketsInsurance marketGreeceBulgaria
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