It is to no one’s surprise that nearly all insurance companies are having problems. Their results are suffering due to the downturn in the value of stocks in which they had invested during 1999-2000, the broad-ranging health cover costs of many insurance policies sold in the past, and of course vehicle insurance, which is a lossmaker, either because Greek drivers are careless or because insurance rates are low. Insurance companies, whether they belong to the public or the private sector and irrespective of their size, have several problems, as the industry’s professionals know very well but tend to put a brave face on. But the situation is a time bomb which is threatening to explode in the government’s hands. After all, the size of the losses does not usually matter as much as the way in which the problem is handled. Appropriately, the Development Ministry has begun making strict checks this week in order to identify which companies deserve the solvency certificate that is essential if they are to continue to operate. These checks must be strict, as no one wants companies of dubious solvency in the market. It would be a grave mistake, however, for the ministry to remain a passive observer. It needs to take a series of measures that would not obviously favor those that are consistently unreliable, but would assist companies to overcome their problems. There is also great scope for clear rules to strengthen the industry. Current legislation forces companies to invest part of their reserves in real estate in order to avoid vulnerability to stock market fluctuations. Yet the value of company property is calculated at the «objective» prices officially set by the tax authority, which are known to be considerably lower than real market prices, sometimes by as much as half. This, in fact, is an unfair law as it forces companies to purchase real estate whose value is then included in reserves at a lower price than the actual one. If International Accounting Standards were in force (as they will be in a year’s time), real estate would be calculated in reserves at its actual price, based on experts’ assessment. This is how it works in other countries and could have been working in Greece. Furthermore, International Accounting Standards, as applied in many countries, provide that shares in reserves concerning long-term insurance policies are calculated by their purchase price, at least for some time. In Greece, the state of affairs is that shares are calculated, in every case, by their current price. The Greek state may be strict but nobody thinks everything is perfect. On the contrary, this superficial strictness pushes companies to cover huge losses, some of which are theoretical, hampering any prospect for recovery and growth. What is required now are measures to make the industry more efficient, along with effective supervision, commitment by the companies to specific obligations and strict control of commitments. As a recent survey by the Foundation for Economic and Industrial Research (IOBE) has pointed out, to tackle the social security issue, insurance companies must be mobilized to meet pension needs for the next few years. There is no alternative to the smooth strictness with which the Development Ministry must proceed in coming weeks.