ECONOMY

Insurers’ race intensifying

Insurance companies are still fighting neck-and-neck for the lead in insurance turnover and the prestige of heading the market. Development Ministry data shows that Interamerican maintained its top spot in the first quarter of 2005 with a total production of 76.1 million euros, but just behind it there is another multinational, Alico, which has climbed two spots since the last quarter of 2004, when it was fourth. Its total production came to 74.8 million euros in January-March 2005. The rise of EFG Insurance, a Eurobank subsidiary, to the second spot at the end of 2004 marked the intensity of the competition and, as the data confirm, this continued into early 2005 at least. Therefore, the biggest state company in the sector, Ethniki General Insurance, has dropped another spot since the end of last year, falling to the fourth one in Q1, with EFG Insurance third and ING Life fifth, with a production of 39.4 million euros. The race will continue to get tougher in the coming months and the productive outcome of the year will be determined by the policy each company will follow regarding mobilization of sales networks. Interamerican focus The market has now turned its attention to the restructuring moves in the Interamerican network, which besides the merging of offices and the reduction of administrative staff with the new voluntary redundancy program created by the management. With Alico hot on its heels and Ethniki maintaining the golden opportunity of using a very broad client base through the National Bank of Greece group, Interamerican’s lead depends on its efficient sales coordination. For its part, EFG Insurance continues its rising course, constituting a serious threat to Ethniki, which is making its first efforts in bank assurance. However, EFG Insurance’s sales momentum relies too much on its parent company’s banking network and some aggressive promotional activity, drawing criticism from competitors about its ability to keep its portfolio in the future. In general insurances, Ethniki is the traditional market leader, although its significant distance from the sector’s second and third firms, Phoenix Metrolife and Interamerican, respectively, does not come with a great optimism for the course of turnover. The losses in the car domain over the last few years, with clients turning to smaller companies, continue this year so the share of major companies is steadily diminishing. The total production figure is also affected by the low pricing policy followed by virtually all companies in the domain. The other sectors are showing a measured growth, and no one can tell with certainty whether a satisfactory turnover rebound will come. On the contrary, the first indications for 2005 are showing a tough year for the insurance sector as each company is trying to make the most of its own weapons and forces to face the stagnation in the whole domain. This stagnation actually creates civil-strife conditions in some cases, making several observers note that the sector will be forced into a survival-of-the-fittest situation, ahead of developments to come from the European Union. Reserves with deficits Already, the first indications coming from the Development Ministry’s continuing monitoring of insurance companies’ reserves are showing that the deficit to emerge will be far higher than last year’s 133 million euros. The reason for this is the stricter methods the ministry is using to check the sufficiency of companies’ reserves. Ministry sources confirm that the competent department will be as strict as it can be as the minister has called for the sector’s sanitization. This does not rule out revoking licenses for any companies required.