ECONOMY

State and GSEE clash again on the role of private insurance schemes

The government’s attempts to prepare the ground for the entry of private insurance schemes in forthcoming social security reforms came under attack yesterday by umbrella trade union body GSEE, which insisted that the system should continue to be state-run. Addressing the Hellenic Union of Insurance Companies’ annual general meeting yesterday, Finance Minister Nikos Christodoulakis and his development colleague Akis Tsochadzopoulos said that insurance companies can play a role in the soon-to-be revamped social security system. «It is evident that impending social security reforms will set out a framework and role for the insurance industry,» he said. «There is room for insurers to play a supplementary role, widening the choices for the insured.» Tsochadzopoulos was more emphatic on the need for private insurance cover. «The social security system needs changes and such changes can come about via cooperation between the private sector and the public structure. This is the direction we are heading for,» he said. Such talk ignores the nature of the publicly run system, GSEE said in a statement. It said the different institutional framework and orientation of private insurance rule out a role for the sector, either in a principal or supplementary role. The social dialogue on social security reforms is due to kick off late next month. Speaking at the meeting, union president Dimitris Kontominas said the industry is in dire straits, as a result of oppressive taxes and government disincentives. «The government insists on maintaining anachronistic taxes like stamp duties and the tax on turnover as well as allowing for low tax credits for life and group policies,» he said, reiterating the union’s demands for the abolition of the charges and a hike in tax credits for life and group insurance policies. Kontominas said the result of the discouraging environment is evident in the country’s low insurance cover, amounting to just 2.2 percent of gross domestic product against the average European Union ratio of 8.1 percent. Insurers’ investments come to just 4.2 percent of GDP, less than a tenth of the EU average of 53.9 percent. The union head also slammed the state for closing down insurance companies, estimated at more than 30 in the last three years, instead of restructuring the troubled businesses. In turn, the series of closures have burdened the auxiliary insurance fund with a 40-billion-drachma (117,388,000-euro) deficit, which could balloon up to 150 billion drachmas (440,200,000 euros) in the event of more bankruptcies. Kontominas further stressed the need for premium increases. The union head also slammed the state for closing down insurance companies, estimated at more than 30 in the last three years, instead of restructuring the troubled businesses. In turn, the series of closures have burdened the auxiliary insurance fund with a 40-billion-drachma (117,388,000-euro) deficit, which could balloon up to 150 billion drachmas (440,200,000 euros) in the event of more bankruptcies. Kontominas further stressed the need for premium increases.