Insurance firms in the red

Development Ministry checks have revealed that nearly half of Greece’s car insurance firms are on the brink of insolvency, the government said yesterday, threatening to force defaulters to shut down. Deputy Development Minister Yiannis Papathanassiou told a press conference that an audit of the finances of the country’s 49 firms that deal with vehicle insurance had led to the discovery of a cumulative 133-million-euro shortfall in the companies’ capital reserves. «Checks have shown that a significant number of companies do not meet the required solvency margin,» Papathanassiou said. «The total sum that these companies should pay, in order to receive certificates of solvency, is 133 million euros.» The deputy minister also warned that, in addition to the defaulters, «quite a few companies’ capital reserves are just above minimum, and these firms must necessarily increase their share capital within 2005.» Ministry sources said some 20 firms had been found to be lacking in capital reserves. This would imply that roughly one in four Greek vehicles is insured with a company that might soon be forced to close down. However, while imposing a February 18 deadline for firms to raise the necessary capital and warning that the government would show «zero tolerance,» Papathanassiou expressed optimism that the problem could be handled. «Most companies have already started the process of increasing their share capital,» he said. «The cash that will enter the insurance market through these increases will be considerably higher than the 133 million shortfall.» Papathanassiou said that on February 21 he would name the companies that met the solvency margin, as well as those that did not. The latter firms will have until June 30 to tidy up their finances, or lose their operating permits.