Private insurance seen growing

The government yesterday confirmed its intention to set the private insurance industry on a sounder footing and strengthen its role in the country’s social security and pension system. «Gone is the day when the state conducted bogus inspections in insurance firms… It will no longer grant bogus solvency certificates. Those companies that have not yet brought their reserves to the required level have no other option but to comply with the law,» Deputy Development Minister Yiannis Papathanassiou told a conference of the Association of Insurance Companies of Greece (EAEE) on the occasion of «Private Insurance Day.» Economy and Finance Minister Giorgos Alogoskoufis said the tax incentives included in the government’s draft bill, unveiled on Wednesday, were the first steps in the direction toward increasing the participation of private insurance. «More steps will follow, initiatives aiming at familiarizing citizens with private insurance, depending on their means,» he said. The tax bill’s favorable incentives for private insurance are an increase in the premiums deductible from taxable income from 1,000 to 1,100 euros, a 50 percent increase in the premiums paid by companies for group insurance, which are deducted from taxable profits from 1,000 to 1,500 euros, and a 20 percent increase in the deductible outlay for domestic unit-linked policies up to 3,000 euros. Nevertheless, Alogoskoufis stressed that the role of private insurance is important as a complement to social insurance and that the government «will not touch the basic parameters of the existing system.» «Emphasis will be given to the sources of the problem, which are the demographic trends and the integration of foreign and young workers in the social insurance funds.» The EAEE’s Minos Moysis said the prevailing idea that only the present pension system can offer satisfactory incomes to pensioners is refuted by the consequences of economic and demographic developments. «A solution is offered by pension-saving schemes, for which private insurance has all the attributes required for being that vehicle,» he said. Papathanassiou urged insurance firms to place greater emphasis on the quality of their products and the competitiveness of their premiums. Giorgos Zavvos, a staff member of the European Union’s legal service, said the Union is still searching for the right balances in the system of the so-called three pillars of the insurance system, which are social security, occupational schemes and private insurance. Paul Overmars, president of the Dutch Association of Insurance Companies, outlined his country’s positive experience from the participation of private insurance in the pension system. Alogoskoufis announced the appointment of the Economy and Finance Ministry’s former general manager, Yiannis Sidiropoulos, to head the new overseeing authority for the private insurance industry. Separately, Labor and Social Security Minister Panos Panayiotopoulos told union chief Christos Polyzogopoulos that the government guarantees the uninterrupted payment of pensions and that the Social Security Foundation is economically strong, despite state debts to it. Polyzogopoulos said the unions will not accept the additional financial burdens on social security funds caused by large voluntary retirement schemes, such as that of the National Bank.