ECONOMY

Car insurers seek a 7-10 percent rise in premiums

Car insurance companies have been asking for an increase in premiums, but the competent minister says he has not heard from them. «I know nothing about the subject and I have not met the gentlemen,» Deputy Development Minister Kimon Koulouris told reporters yesterday. Koulouris’s statement does not mean there will be no increases. In fact, the sector finds itself in a sticky financial position and is not obliged, in any case, to seek the government’s guidance. Companies active in car insurance accumulated losses of more than 120 million euros last year and are determined to use the renewal of the contracts, which usually takes place at the beginning of the year, to hike up premiums. Each company will decide how much; however, according to industry sources and statements during the recent conference of insurers and reinsurers on the island of Hydra, this increase will average 7 to 10 percent. Some, however, have said that increases could be introduced in two stages. The insurers’ rationale for the increases is that they are obliged to pay out excessive sums, especially for accidents. They say the amounts the court adjudicate are «irrational,» especially with respect to damages for emotional distress suffered by people as the result of an accident or by their immediate relatives. In the past, such damages were very low, but in recent years they have skyrocketed. Only the courts are to blame for this, insurers believe. In recent years, insurers have been calling for the introduction of an objective system of assessing material and bodily damage, pointing out that other countries, such as Italy, have adopted such systems. Adopting a similar system would keep damages at «reasonable» levels and prevent courts from mandating excessive payments, the insurers believe. There is, however, another side to the argument. Many insurance companies, especially those not financially healthy, choose to delay their payments, either because of their financial difficulties or because they want to improve their immediate results by showing fewer liabilities. This practice has kept many companies alive, but it has hurt the sector’s reputation and credibility. Indeed, it is the widespread use of such tactics which has led the courts to increase the amount of damages awarded.