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Dimitris Ruhalas is the publisher of the Greek specialized magazine Insurance Life and talks to GRReporter about the problems of the Greek private insurance business. He didn’t miss to note that the activity and effectiveness of the Financial Supervision Commission particularly impressed him during his recent visit to Sofia.

How have you entered the insurance business and what made you publish the Insurance Market?

When I started my university education in the 1970s I started to sell insurances in parallel. So, the insurance activity attracted me only hourly at the beginning. However, I needed seven years of searching to decide to publish a magazine on the innovations in the insurance business. I relied on my knowledge in the field of media and my father’s help. I published the first copy of the Insurance Market daring as a beginner in 1977 and dedicated myself to it ever since. My hope is to pass the baton to my daughter one day.

Which are the most stable insurance companies on the local market? What made them succeed?

I have to say that no company can be defined as completely stable, neither on the local nor on the international market. The people who run a company determine its nature with their decisions and actions. No leading figures can be found on the Greek market at present.  Unfortunately, this also applies to politics, to cultural and sports life. In this context, I believe the Greek reality is unstable for all today.  
 
Some insurance companies recorded increase in profit in the first half of 2010 despite the crisis and the overall market shrinkage. How would you explain this phenomenon?

I think the paradox is that there is demand on the Greek insurance market, but consumer confidence is fragile and people do not easily trust insurance companies. Profits during this period could be defined as logical having in mind that the companies ignore the controlled environment that our economy develops in today. They also ignore what will happen to it at the end of 2012.

How much does the state public health insurance strengthen the interest to the private insurance?

Theoretically, the crisis in the state insurance makes the financially strong consumers choose the private insurance. But when it comes to the nature of the matter and the customers face the lack of professionalism and confidence they return to state insurance as the only solution and the private companies get strongly opposed.  

Do you expect a wave of mergers of insurance companies after the same  wave in the banking sector?

No. The objective in Greece today is to postpone the inevitable issue of the vitality (the financial survival) of financial institutions over time in the best case, but not by the method of mergers.

Would you explain to us in detail what the advantages of private pension and health insurance are?
 
Theoretically, when basic needs for a normal life are provided, a person is seeking additional services so as to ensure an even better life. Then here comes the private insurance where the customer chooses the quality of life that he is able to buy for himself and for his family according to his financial means. The primary need has no role in this choice because the public rights of anyone covered it. The insured agrees to pay for the level of the services he considers to deserve by his own means. The private pension insurance together with the health insurance is a social security of second generation. They are products of the capitalist system.

What trends have the economic crisis imposed on the insurance habits of the Greeks? Can we speak of chain life insurance withdrawal due to the reduced market liquidity and is there an increase in property insurance?

In my view, a serious withdrawal of savings was observed in Greece in the past three years. There is felt the failure of the insurance industry to offer services that meet the emerging social needs. There is an opinion that private insurance is a good opportunity but, unfortunately, it is not applicable in the current economic crisis. The official data of the Insurance Supervision Commission for Private Insurance show that the decline in the volume of life insurances is 2.67% compared with the first half of 2009 (€ 1.195 billion by the end of June 2010 compared with € 1.228 billion for the same period of the last year). The preliminary termination of the contract remains the greatest problem of life insurances. The insurance companies paid approximately € 613 million for life insurances for the first six months of the year. Almost half of the amount was paid for preliminary terminated contracts. Damage insurances recorded a slight increase of 2.31 percent in the first half of 2010 compared to the same period of the last year.

How do you see the future of private insurance in Greece in the medium term? Do you think there is a danger to the survival of other private insurers as happened with Aspis and Commercial Value?

Some leaders of certain international insurance companies of low turnover rate on the Greek insurance market would like the recovery process in the country to continue so that other Greek companies in the sector to close down. Personally, I think there are still companies that experience serious difficulties with their liquid funds and financial stocks, but I do not accept and support the idea of revoking the licenses of these companies. The market requires us to seek other alternatives but the main goal remains to keep reliability and propriety. The Auxiliary Fund, the Private Life Insurance Guarantee Fund and other similar organizations are the tools that can prevent similar unpleasant incidents. Adverse market conditions in a period of crisis do not help the economic development, but put the things in order.

What measures, in your opinion, should the government take to ensure a more secure and competitive insurance market?

It should require the funds needed to establish and manage an insurance company to double compared with the funds required at present. And this should be based on the experience of the European insurance companies that have faced and overcome the same difficulties 10-20 years ago.

How do you assess the policy of the socialist government so far? Do you think that some measures could be delayed or not have been applied at all? Which of them, if so?

We have no socialist government. We have a party that contains the word "socialism" in its abbreviation and the leader of this party is chairman of the Socialist International. Our government is controlled by the expert Troika (the International Monetary Fund, the European Central Bank and the European Commission) and has given up its ideology.

Can you forecast the future of the insured in Aspis? Is there any danger to lose their money forever?

There is a great danger, but I hope this will not happen.

Have you observed the insurance market in Bulgaria and how would you compare it to the Greek market?

Bulgaria's transition from a strictly programmed economy to the free market and the European Union has coincided with the onset of a very deep crisis. According to my observations, the Bulgarian insurance market can boast of a well-developed supervision system.