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Greek private insurers seek greater market share

27 September 2011 / 22:09:17  GRReporter
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As an emerging democracy, Greece only now started to make plans to strengthen the three pillars of pension insurance, which has been left largely to the state for decades. Higher pensions in the country provided a good living standard for the Greek pensioners. Private pension insurance had its followers, but it could hardly be said that this sector developed in full speed. The deepening crisis brought to the surface the worn out major state pension funds, which suffer from chronic deficiencies of resources, mainly because of poor management in recent years. Even more serious is the situation in the professional pension funds, which are also under state control.

Strong and capable insurance companies to take control of the second pillar of pension insurance, i.e. professional pension funds, is the proposal of the President of the Hellenic Association of Insurance Companies George Kotsalos. With the experience and practice of private entrepreneurs, professionals in the industry believe they will be able to recover the problematic funds much faster, and the resources of better-managed funds will provide more investment maneuvers in a period of liquidity deficiency.
Kotsalos stressed that the insurance industry finally has to take the role of an auxiliary arm in pension and health insurance offered by the state, because under today's financial conditions, public sector pensions will prove insufficient to maintain the desired standard of living for the elderly. In Europe, the so-called second pillar of professional pension funds are on the boundary between public and private insurance units. Totally, over 83 million people in European countries have joined the professional social insurance funds and have invested about € 3.5 billion in the second pillar of social security.

In Greece, the supplementary professional insurance in the private sector was introduced in 2002 and only nine professional funds have been established since then because the law requires that the company should have over one hundred employees. The companies employing less than 100 people are the largest number of companies in the Greek economy, which makes it difficult to apply the law. The change in the terms could improve the market and the introduction of new regulations under Solvency II would allow measuring the risks of insurance companies in depth. Thus, the results will require appropriate capital levels to be ensured so that costumers’ investment is as protected as possible.

Even the Minister of Employment and Social Security in Greece, George Koutroumanis recognized that the current legal framework was not helpful to the healthy development of supplementary social security. "Until now, the structure of the Greek pension system has not been in favour of the development of supplementary pension schemes", said Koutroumanis and expressed his support to the professional groups and individual companies to create alternative funds to their needs for health care or retirement outside the public insurance system.

Koutroumanis said that the sector modernization requires complete overhaul of regulations, starting from changes in the supervisory regulations on private insurers to ensure impartial and effective control of the companies in the sector. It is also necessary to strengthen the collective labour bargaining on supplementary social insurance to create specific agreements between employees and employers who will participate in the financing of professional funds; creating rules to ensure the mobility of the workforce as well as rules for the transfer of insurances.

Meanwhile, it became clear that the Ministry of Health has signed a contract this week to use 556 beds from 15 of the largest partial insurance companies that provide additional health insurance. The agreement comes into force on the first day of October 2011, when the price for the bed per day should be estimated and indexed, which according to initial estimates, will be about 20% higher than the existing pricing.

Tags: EconomyMarketsCompaniesInsurance companiesGreece
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