The advent of 2004 finds the Greek insurance industry still in a state of stagnation, as expectations for a recovery failed to materialize last year. Even though results as a whole seem to be improving, as several companies trim losses and other return to at least marginal profitability, this development alone seems insufficient to sustain an optimistic outlook. The industry’s life sector registered a strong increase in turnover, due exclusively to the surge in group insurance, mainly prompted by new tax breaks. By contrast, the sector of individual life policies came under further pressure by the continuing downturn in the unit-linked branch, making for an overall picture of stagnation. Although the «classic» products seem to be staging a comeback, the higher turnover did not meet expectations, despite the tax breaks. Similarly, the increase in total premium revenue from hospital care cover was largely due to hikes of up to 25 percent. Also, the general insurance branch (which includes all segments other than life, pension schemes and accompanying health cover policies) managed to post a 10 percent rise, but this was below expectations given the still largely untapped Greek market. The prevailing view in the industry is that insurance has still not won the confidence of the average man in the street and this is seen as the main reason why demand for cover in general remains limited. Responsibility for this is laid at the doorstep of the government, which failed for one more year to live up to promises to push through necessary structural changes. The list of the industry’s chronic problems includes the central issue of effective overseeing and ensuring of sound practices by firms, the abolition of taxes on behalf of third parties and the extension of tax incentives, and the promotion of the appropriate conditions for the growth of group and company retirement funds in the framework of social insurance reform. The degree to which the government has responded to such problems has been almost nil, industry officials say, adding that it would not be an exaggeration to say that in the face of the pressing problems the Development Ministry in 2003 remained coldly indifferent. «Its reflexes are only activated when press reports of premium rate hikes see the light of day,» they say. Current Deputy Development Minister Kimon Koulouris, who is responsible for insurance, may have been seen to realize that the problems of the insurance industry could not be dealt with in the framework of administrative measures and public relations exercises, but is accused of opting for a policy of turning a blind eye and being apprehensive of tackling them. Insurance issues appeared to be absent from the political agenda of the deputy minister’s otherwise prolific daily public presence, insurance industry sources charge. ‘Scourge’ The lack of an effective overseeing independent authority is seen as developing into a real scourge for the entire insurance industry. It is argued that it is no coincidence that for a very large section of the public the concept of private insurance lacks credibility. Insurers are at pains to stress that although such an attitude may be in some measure justified, it is unfair for the industry as a whole. In no other European country, they note, does the insurance sector come under so much criticism as in Greece, and in no other country is the overseeing function so deficient. Frequent media references to a double-digit number of insurance firms with huge cash flow problems are not exaggerations, they admit. Occasional administrative measures appear to confirm such reports, but the government is accused of belying expectations and of a lack of boldness in setting the industry on a sound financial basis and of continuing to renew operating licenses to problematic concerns. Moreover, it is charged with failing to protect consumers’ interests, remaining entirely inert vis-a-vis the phenomenon of unfavorable mass alterations of policy terms without the consent of those insured. The names of insurance firms that do not meet legal operating requirements and obligations to clients is said to be an open secret in the industry, of which the ministry is also aware. On the other hand, the healthy segment of the industry, which is striving to limit costs and improve services, is unfairly subjected to pricing controls, insurers say.