ECONOMY

Rise in car insurance premiums

The cost of restoring order in the insurance industry in Greece is going to be heavy for clients, as the revocation of licenses removes low-premium insurance firms from the market, particularly in the car insurance sector. It looks certain that premiums will soar, as a result of developments that are forcing those companies staying in the market to raise their insurance charges. Among these developments is the increase in minimum compensation amounts, which was introduced in June, and has led to premium hikes of about 20 percent in some instances. Raising the threshold of 100,000 euros per accident to 500,000 euros per victim in June has yet to be factored into market calculations or reflected in compensation payouts. This is because claims involving bodily injury caused in accidents have not yet reached the courts, since the time required for a case to be heard is as long as 12 to 15 months. However, all forecasts point to a geometrical rise in the cost the sector will have to bear for compensation payouts, as they will be calculated depending on the number of victims in each accident. This alone places the Greek insurance market among those considered to be high risk. Munich Re data shows that instances in which there are more than two victims account for 43 percent of serious accidents. So instead of the judge dividing the payout among the number of victims, each victim will now be entitled to as much as half a million euros, taking the total compensation to as high as 2 million euros for four victims.