Unprecedented scrutiny into finances of errant insurers
Development Ministry sources said the findings of an extensive audit into the solvency of insurance companies will be announced by the end of the month, and expressed confidence that problematic concerns, without the required reserves, will not escape the legal consequences. They said the number of firms with large black holes in their finances is in double digits and that the minimum requirement they will be obliged to fulfill is large share capital increases. Ministers are said to be willing to go as far as revoking operating licenses, or may well publicize the names of any firms that refuse to comply with the minimum requirement. Doukas Paleologos, managing director of the country’s biggest insurer, Ethniki Insurance, said yesterday he has confidence that the ongoing auditing process will contribute to putting the market again on a «healthy footing.» «The overseeing mechanism has never been mobilized to this extent before,» he said. Paleologos said the car insurance sector is suffering from the practice of low premiums and unfair competition by many companies. He added that this year emphasis will be placed on retail sales, and particularly car, home and small enterprise insurances, on new life insurance products and on bancassurance. Separately, National Bank of Greece president Takis Arapoglou said that its biggest subsidiary, Ethniki Insurance, will follow NBG in its penetration in Southeastern Europe, and pledged full support as Ethniki’s restructuring program is proceeding. First, Ethniki’s share in Cyprus will rise from 2 percent to 5 percent, followed by setting up two companies, one for life insurance and another for general insurances. Also, Garanta, the NBG insurance subsidiary in Romania, has just increased its share capital by 2 million euros.
