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Victoria Mindova

    State pensions have lost value against the standard of living by 22% for men and 25% for women, shows a study conducted in 16 European countries. The data was reported by the General Director of the Association of Insurance Companies in Greece, Margarita Andonaki at the conference The Future of the Insurance in Greece, organized by Financial Times. The forum takes place during a period of dramatic reforms in the Greek social security system and a deep economic crisis that affects the insurance market as well. Similar to the bank stress-tests, the private insurance companies will be subjected to such tests, called Solvency II and are faced with the need to increase their capital and ensure greater transparency of their investment. As in the banking sector, in the insurance sector as well is expected that the financial storm will "sweep" the smaller and financially unstable companies and through a series of mergers, sales, and maybe bankruptcies out of the 75 currently operating companies in the Greek insurance market will survive only a few.
    "The reality shows that people should prepare for a lower quality of life in their elderly age, or simply should seek additional ways to increase their pension benefits through greater savings over the long term earlier," said at the forum Margarita Andonaki. According to her the first steps towards strengthening the citizens' interest in private insurance are the tax benefits for those who turn to voluntary health and pension insurance. She noted that if Greece retains the same type of social security policy in 2060 the country will be forced to give 12.4% from the GDP to pay pensions and social benefits. "The trends are that in the future people will have to work longer and pay the state higher social security taxes in order to secure their retirement," she concluded.
    This truth has apparently been understood by the Greeks, because 75% of them or three out of every four respondents want to have the right to choose whether to have public or private insurance. That shows the study of the insurance market, which will be officially presented in November. "The people are forced to pay two or even three times for the same service. If we take as an example the health insurance, where citizens once pay for health services imported through taxes, a second time through their payments deducted from the monthly salary for state insurances and a third time when they pay with their own money to cover the same services, but for the private insurance, "said Georgios Veliotis, Executive Director of Health Insurance in the second largest Greek insurance company Interamerican.
    He added that the insurance companies must develop new more flexible insurance products, so they can attract more customers and better meet their needs. These products must allow the customers to choose the period, the amount of the payment and the period of the voluntary retirement or health insurance much more freely and according to their own capabilities. He offered to seek new ways these processes to merge or find alternative packages that will facilitate the citizens and enhance the quality of services offered.
    According to the President of the Association of private insurance companies in Greece Minos Moisis, who is also president of the largest insurance company in the country, in many cases the private insurance cost less than the state one, offers better quality and greater range of services. "For now, however, dominates the state insurance because of its mandatory character. Meanwhile, the national social insurance funds face more and more difficulties to meet the needs of the citizens, "he added. His proposal is the country to start cooperating with private insurance companies. They have the basis to create an alternative social security, which can help the state system and give citizens the desired quality of life in the elderly age in times of economic instability. "From key importance is the creation of a new system that will enable people to diversify their investments so that at retirement age to receive income that would provide them a good standard. This can be achieved through private insurance, which will fill the gap between the desired and actual retirement benefits received by state insurance, "said Minos Moisis.
    "The general aging of the European nations, the low birth rates, the greater longevity are part of the reasons for the exhaustion of social security funds both in Greece and in other countries around the world, is the opinion of the Executive Director of Eurolife Insurance EFG Alexander Sarrigeorgiou. He stressed that one enjoys greater longevity compared with the data from a century ago, but that the costs for maintaining the standard of living, different for each country is costly. Therefore, citizens must seek new ways to supplement retirement incomes.
    Proposal for cooperation and dialogue between the government and private insurance companies was made by the Minister of Employment and Social Policy Luka Katseli as well, but the opportunities do not see her in a potential denial of compulsory state insurance and ... in unemployment benefits. "The price of health services for the unemployed is between 3,5 to 5 euros per month and with little investment we can give security to those who most need it," said at the forum, the social minister. She asked the insurance companies to help the state to reduce the costs for treating people with chronic illnesses and the accident victims.
    Why though society sees private insurance as the only alternative for better life at old age, it is in no hurry to make private insurance? In Greece, the share of private insurance in GDP is significantly lower than in other European countries. According to the Secretary of the Committee for Consumer Protection S. Spirakos the reason is that the citizens do not trust the private insurers whose business is characterized by a lack of transparency. "The lack of transparent rules allowed in recent years in the insurance market to appear investment products without complying with the basic rules and to inform and explain to customers how those products work," he said. Spirakos called for more flexible insurance packages and giving up the practice of sharp increases in the payments, without this being enshrined in the contracts with the customers.