Far-reaching fallout from shutdowns

The Economy and Finance Ministry stepped in yesterday, in a bid to ease concerns among employees and policyholders after the shutdown of five insurance companies earlier this week, by saying that action will be taken to protect jobs and insurance contracts. The board of the Supervisory Commission for Private Insurance on Monday revoked the licenses of Aspis Pronia General Insurance Company, Aspis Pronia Life Insurance, General Union, General Trust and Skourtis because they didn’t meet minimum liquidity requirements. The shutdown has left some 700 people without work and an estimated 1.1 million car and life insurance policyholders calculating how much money they have lost. The ministry said holders of life insurance policies, estimated to number around 250,000, will not lose any money they put toward the product nor any contractual rights, because the portfolios belonging to the defunct companies will be transferred to a peer under the supervision of a government-appointed official. The 850,000 car owners insured with one of the five companies will remain covered for one month under an auxiliary fund before having to insure their vehicle elsewhere. The Association of Insurance Companies Greece, which represents 77 members of the industry, also said yesterday it will make «every possible effort to absorb the employees of the companies shut down» and to ensure that payments to and from the auxiliary fund are made smoothly. The association backed the regulators’ decision to crack down on the sector on the grounds that the strict application of the law is to the benefit of consumers while also improving the financial health of its participants. Meanwhile, press reports said yesterday that the president of Aspis Pronia, Pavlos Psomiadis, is in contact with potential investors in London in an attempt to gain the financial support needed to reopen his insurance companies. According to the regulators, a 550-million-euro check provided by Psomiadis to meet liquidity requirements was found to be forged after checks were made by the Bank of Greece. PASOK accuses gov’t of being slow to act With the country less than two weeks away from national elections, the shutdown of five insurances companies turned into a pre-election focal point among political parties yesterday. Socialist PASOK, leading the ruling conservatives by up to nearly 9 percent in some polls, accused the government yesterday of failing to conduct thorough checks on the sector despite numerous signs of emerging problems. «Inaction by the authority in charge in such a crucial sector, such as private insurance, which affects thousands of consumers, is criminal,» PASOK said in a statement. Responding to the criticism, Economy and Finance Minister Yiannis Papathanassiou said that 14 companies have been shut down in the sector, mainly smaller firms, as a result of the stricter checks being implemented in a development that also resulted in 650 million euros being pumped into the sector to improve their capital structure. «As a result of this policy, it is the first time the insurance market has started to attract foreign investors,» said the minister in a statement, referring to the recent entry into Greece of French insurers AXA and the UK’s Groupama. «Shouldn’t insurance firms that do not follow the law have their licenses revoked?» he added.