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The Greek Ministry of Finance has asked private insurance companies to divide the liabilities of failed Aspis Pronoia between them. Aspis has already filed for Chapter 11 Bankruptcy together with five other companies mainly due to their fragile balance sheets exacerbated by the recession. One of  the company’s owners – Pavlos Psomiades – was charged with fraud for trying to forge a cheque and use it as a bank warrant. Insurance industry leaders have firmly rejected the government’s proposition claiming that the state should now take responsibility for allowing companies to proceed with moves characterized as doubtful at best. 

To make the situation in the sector even worse, the Private Insurance Supervisory Committee is drafting a liquidation plan for another insurer in the Life Assurance line of business. The company has recently entered financial distress and is thought to have debt of over €70 million. If it were to proceed, this liquidation would damage the Greek insurance market severely, with Aspis already failed and ING’s decision to withdraw their business from the Hellenic market.

Private insurers that remain in business have their fears that the government might decide to instate a special Assistance fund for the Life Assurances, which will be authorized by law to service claims with past dates. Directors at these companies believe that acting on past dates is illegal and if the private companies were to take a stake of Aspis’ debt, some of them will fail to complete the Solvency II program and other will jeopardize their shareholders’ expectations and put customers in a difficult position.  

Private operators are also concerned about the lack of communication channels with the government   and are being aggravated by reading the news in the newspapers. Managers are alarmed that no one would consider their opinion when issues in their own industry are being discussed. Understandably, this faces companies with a severe problem, especially in times of severe financial crisis and fragile public finances. Insurers are reportedly getting frustrated with the Ministry of Labor with the latter excluding them from any kind of dialogue concerning social insurance. By doing so, private companies believe, the government ignores the private sector of the insurance business.

Speaking to the Naftemporiki newspaper, some of Greece’s most distinguished insurance experts have loudly criticized the government’s recent actions. Doukas Paleologos, presiding the Private Insurers’ Associations said: “We find the government’s request to cover Aspis’ debt to be unacceptable, especially in times of financial crisis and trouble for our companies. The Assistance Fund that the government is planning to create should be very careful not to process past date claims, and only operate in future cases. “

The president of the Health and Pension Insurance commission at the same Association – Alexandros Sarrigeorgiou added: “We are clearly and loudly against any action on past date claims by the Assistance fund. We are also clear on another point. Private insurers have nothing to do with Aspis. We lay on the other side and the ministry should try and identify better and more efficient solutions to the problem. Private companies are willing to help but only if the government makes the first step towards breaking the silence and establishes some dialogue channels. “

Petros Papanikolaou, Managing director at Alianz Greece said: “We are not against the Assitance fund per se. We are willing to accept it only in case it deals with future claims, rather than cases from the past. Any pledge to process claims with past dates would be illegal and will damage private insurers.”

Panos Dimitriou, Managing Director at Generali added: “ As far as I know, the European Commission is drafting a directive for the creation of Assistance funds for the Life Assurance sector. The actual content of the directive remains to be seen in the near future, so the government is already making steps in the right direction. Assistance funds however can only act on future cases and not past-dated claims.“

Georgios Mavrelis from Interamerican concluded: “We are absolutely against the government’s idea to create an Assistance fund for Life Assurance. We are also strongly opposing the suggestion that companies with healthy balance sheets should pay their competitors’ debts. It’s only unfair for the government to ask us to offset debts piled up due to the lack of control and supervision.”