The need for an independent overseeing authority for the private insurance industry was highlighted by the recent report by the Stathopoulos committee, which was set up to examine the state of the industry. «Compared to a public department,» said the document, such an agency «will have a greater potential for detachment from current policy criteria, so that it may devote itself to the task of supervision unfettered by political expedience.» A mere reference to even recent inspections in the industry suffices to reveal the huge lack of supervision but also what is in store if something drastic is not done. According to a recent report by the Vehicle Accident Auxiliary Compensation Fund, 43 licenses to insurance companies have been revoked since 1982. The fund assumed the civil liabilities of these companies, amounting to 203 million euros, and was entitled to liquidate their designated reserves in order to pay compensation. By December 31, 2002, the fund had paid out 156 million euros, with 47 million still pending. But the reserves of these defunct companies that were made available to the auxiliary fund amounted to no more than 14 million euros, or a mere 7 percent of their total liabilities. The figures involved are very eloquent indeed: First, the number of licenses revoked alone exceeds the total in the rest of the European Union as a whole. Second, until they were shut down, the companies involved were supposed to have been under the supervision of the Department of Trade and their financial statements adequately inspected by chartered auditors. How did they end up with reserves equal to one-fourteenth of their liabilities when they went bankrupt? Were any of those responsible under the law ever punished? Were any of the chartered auditors who signed these companies’ financial statements ever called to account? Amazingly, such questions are still awaiting answers. And what’s more, the majority of these firms are still in a state of liquidation, decades later, with the reason for this being a dispute over how liquidators are to be paid from the minimal reserves left. It is interesting to note that the phenomenon still continues unchecked and unabated. For conspicuous examples: The license of the Estia insurance company was revoked in 2000. Its liabilities amounted to 21 million euros and its reserves were just 1.9 million. Argo’s license was revoked in 2001, when its liabilities were close to 20 million euros and its reserves 4 million. The Greek insurance industry also holds the record for the insurance firm with the least longevity: Panelliniki was established in October 2002 and its license was revoked in April 2003. The record of its history is overwhelming: The firm never deposited the required start-up capital in the corporate account and its chief shareholder had been involved in a host of litigations – none of which were finalized but this is how he managed to obtain a licence. In the six months that the firm was in operation, it issued hundreds of car insurance policies that have resulted in considerable liabilities for the auxiliary fund. By the time it was shut down, Panelliniki had collected premiums totaling 6 million euros but less than 1,000 euros was found in its till. Mind-boggling There have been mind-boggling cases, too: Road assistance firm Express Service had the revocation of its license upheld by the Council of State but the revocation was suspended by the same department that issued it. Later, the firm was converted into a commercial company, which would have gone against the law had all its policies not expired and another firm not undertaken its liabilities. Even today, there are many insurance firms whose reserves amount to no more than 40 percent of premiums, with some having a ratio as low as 10 percent. When the average reserve ratio is 120 percent, one wonders which will be the next Estia or Argo, burdening the auxiliary fund with another heavy block of liabilities. No modern society can go without private insurance, which can also serve as a significant lever for economic growth. This matter should be of concern to millions of our fellow citizens, the overwhelming majority of whom do not have the necessary knowledge to differentiate which insurance firm is reliable and which not. It is the job of the government to oversee the industry, strictly and effectively. It is high time the government realized this obligation and proceeded to set up a truly independent and adequately staffed overseeing authority. But above all, it must give it the necessary political backing if it wants to see it rise to the standards that have long existed in other European Union member states. (1) Doukas I. Palaiologos is the managing director of Alpha Insurance and general secretary of the Union of Insurance Companies of Greece.