ECONOMY

Insurance premiums balloon

Consumer organizations are bringing health and hospital cover insurance policies under increasing scrutiny, as recent premium increases by almost all insurers have exceeded 10 percent, on top of others in recent years that have been multiples of the inflation rate. The issue has been highly contentious, as a large number of policies are old and the increases have been announced without any prior notice to the insured. Moreover, the rises have put paid to hopes of restraint on the part of insurers after they reached a compromise with hospitals on a number of points that had caused friction. The consumer organizations say they are inundated with complaints of premium increases – such as the 18 percent by Ethniki Insurance, the country’s top insurer – which are often accompanied by cuts in coverage. Many such complaints are already in the courts and the situation is expected to be exacerbated with the involvement of consumer organizations, which are challenging the right of insurance firms to unilaterally raise premiums without previously examining their clients’ ability to continue paying in the future. Their argument mainly rests on the fact that health and hospital coverage programs, which often accompany assurance schemes, are taken out on a medium- to long-term basis, and, that, to the degree that the criteria that firms adopt in raising premiums are not clear, the firms disregard the insured’s ability to project annual payments for many years ahead. The exorbitant premium increases made by a large number of firms in recent years have forced many clients to cancel their policies, being unable to meet the extra costs. A case in point is European Reliance, which raised its premiums in one go by 70 to 90 percent and cut its benefits – though in the end, it reinstated them after a consumer organization got involvement. There have been similar complaints about ING (previously NN) and Aspis Pronoia, which put up its premiums by 30 percent and, according to one complaint, has quadrupled them over five years. For their part, insurers cite increases in hospital care costs and the accumulation of huge losses in the sector for which the higher premiums do not suffice. Although this does not seem to be far from the truth, one cannot overlook the fact that the main responsibility rests with the firms themselves, as they designed and priced their products in the past. The situation was exacerbated when stock market gains ceased to be a source of revenue – an argument used by European Reliance in a response to a client. Ethniki Insurance claims it loses up to 2 million euros a year from policies signed 10 years ago and which have another 10 to run. Elusive criteria The consumer organizations, which have sharpened their vigilance on the financial sector in recent years in defending bank client rights, are focusing their criticism on the terms of the policies. The Greek Quality of Life Consumer Union, EKPOIZO, argues that the prerequisites on the basis of which insurers are entitled to raise premiums are such that they cannot be checked for accuracy. For instance, most contracts define the basic parameters allowing companies to raise health and hospital care premiums as «their experience from the entire portfolio of this supplementary coverage and the evolution of the average hospital care costs,» «the indexation of compensation for inflation,» «company expenses for this supplementary coverage,» «statistical data from the experience of the company itself for the specific supplementary coverage and the experience of other health service organizations,» or «the actuarial parameters applied for pricing the present appendix.» EKPOIZO argues that such criteria are anything but clear, accessible and predictable and can, therefore, form no reliable basis for an insurer to amend the mutual obligations in the contract to its own benefit and to the detriment of its clients. The only criterion that could be acceptable for premium raises would be increases in the cost of hospital coverage, as objectively recorded by the National Statistics Service.