Insurance firms in crisis of confidence
The serious problems in Greece’s social security system became the crux of a speech yesterday by Deputy Development Minister Yiannis Papathanassiou to the Association of Insurance Companies. He described the Greek insurance sector’s contribution to the country’s economic and social life as «particularly meager» compared to other parts of the world, since it comprises just 2.2 percent of GDP – a figure which reaches 9 percent in other developed countries. Ministry inspections indicate that insurance companies have an increasing tendency not to fulfill some of their obligations. After inspections last year, insurance firms were asked to deposit a total of 133 million euros in order to obtain the required solvency certificate. This year, even before the inspections have wrapped up, data collected so far indicate that over 300 million euros must be deposited in order to obtain certification. Even worse, the deputy minister said that after many consumers complained about delays in compensation payments, firms were indeed shown to have committed serious infringements of the code – some of them so serious that the ministry will refer them to the Private Insurance Commission for a ruling as to whether the firms in question should be closed down. These are firms that systematically refuse to pay compensation due since they illegally use their insufficient reserves to service debts. Private insurance is truly of major importance for the development of business activity and can contribute to economic growth but only on the condition that it fulfills its obligations as a sector. Insurance firms have to realize that the public’s confidence in them is shaken when they do not make compensation payments promptly, which is their only obligation to consumers. It is inconceivable that a sector that receives money from nearly everyone is experiencing difficulties – especially since it has received privileged treatment from all governments. For decades, insurance premiums in Greece have been double, triple and sometimes almost five times the annual inflation rate. Cases of insurance firms not paying out compensation owed is troubling – and a provocation. It’s time to make an example out of firms which do this.