Insurance sector will have to regain people’s trust
The recent unanimous election of Fokion Bravos to the post of president of the Association of Insurance Companies – Greece (EAEE) confirmed the reconciliatory character of the body, offsetting the effect of contrasting trends within it. His main aim, as he told Kathimerini in an interview, is to restore the credibility of the insurance market as its streamlining process has left the sector tarnished. «The Development Ministry initiative resulted in eight insurance companies closing and although through this process the landscape today is clearer and healthier, the restoration of credibility is now the responsibility of the sector itself,» he said. He went on to reveal that «the streamlining has left 100,000 damage cases uncovered, while companies and employees will have to cover losses of -400-500 million via the Auxiliary Fund.» However, «people’s reservations against insurance products are exclusively associated with the credibility of companies.» The sanitization effort by the ministry has paved the way for the market to develop on a steadier footing, as funds of more than -600 million have strengthened the companies’ reserves, «but the restoration of the lost honor of the insurance market in people’s consciences will have to be earned,» he argued. That would require the consensus of all EAEE members, Bravos said, stressing that he is in favor of the sector’s self-regulation: «I shall exhaust all negotiating means my new position provides me with, so that the phenomena of companies sullying the social work of private insurance is wiped out.» The expanded, 19-member board of EAEE will be the main body to discuss the sector’s problems, while the disciplinary committee of the association will become active again. «The association will not hesitate to distance itself from practices that hurt the sector’s credibility, naming and shaming the companies that systematically resort to such practices. Publishing the names of those companies or expelling them from EAEE may be the ultimate measure, but we will not hesitate to take it where the situation is deemed irreversible,» warned Bravos. Acknowledging that the central issue in the entire self-regulation effort is the rationalization of car insurance premiums, which are continuing to drop to particularly low levels, Bravos identified «the insufficiency of the premium as the main problem of the market.» «EAEE data about the premiums received, the compensation paid and outstanding damage claims certify that the basic technical premium in the sector of civic liability for accidents cannot be below the indicative level of -260,» he suggested. He argues that the association has to make it clear to EAEE members that the credible payment of compensation, combined with the maintenance of the reserves required, cannot happen with a lower premium level. The legislative committee on vehicle insurance will also be active on fraud issues and the effort to reduce uninsured cars will continue. Asked about people’s swing toward pension programs, Bravos said it all depends on reliability: «It is impossible to ask anyone to entrust his money to you for 10 or 20 years if you cannot convince them of your credibility. The fears generated by the car insurance sector have cast their shadow on the life insurance sector, too. Building relationships of trust with the insurance companies should be combined with incentives or the lifting of counterincentives by the state, to provide the sector with a much-needed boost.» The EAEE head suggests that the dynamic growth of the life insurance sector in 2006, with a rise of 17.5 percent year-on-year, is a particularly positive indication. «Our aim is to gradually approach the European average, which stands at 8.8 percent of gross domestic product, against just 2.4 percent in this country. In life insurance contracts, the levy of 2.4 percent wipes out any return the insured may have. The prospect of the levy’s abolition with the tax allowances in place would help the insurance market considerably,» concluded Bravos.
