Uncertainty rules in car insurance sector
The motor vehicle insurance sector has got the jitters as the Development Ministry is preparing to announce which companies have met the requirement of bolstering their capital base if they are to retain their licenses. The ministry this week will carry out the last controls for certifying that the requirements have been met, either in cash or in securities and property items, as assessed by independent valuators. Firms which have been found lacking in this important respect during the ministry’s recent extensive probe in the industry are reported to have borrowed even from usurers in order to secure the necessary capital. The probe found holes totaling about 130 million euros and the ministry has had to extend the deadline by a week, but made it clear that even if they are filled and the firms granted the solvency certificates, the inspections will continue. The prevailing climate is one of a transitional phase for the entire sector, as the solvent companies are still awaiting the relevant certificates for fiscal 2003. The difficulties arising from this delay notably include disqualification from taking part in public sector tenders, but do not stop there. Companies, especially those under the strongest pressure, are said to be resorting to dubious practices and piecemeal measures, paying aggressive commissions to agents in order to promote sales but with doubtful guarantees for the insured. Sources even refer to cases of «ghost» companies selling illegal policies at cut-price premiums, and to non-existent insurance agents deceiving the insured and consumers. Such instances have been reported widely in northern Greece, but also in Athens, with thousands of motorists enticed by low premiums but later finding that they had no cover. Policies have been issued by companies named English Union Insurance and Standard Hellas, which are not included in the official register of companies and appear to be non-existent. As a result, the ministry seems unable to intervene directly, but is preparing a relevant file which will be sent to a public prosecutor.
