Insurance anarchy
The statement by Deputy Development Minister Christos Theodorou yesterday that another 13 insurance companies are facing problems with the maintenance of reserves, and his warning of possible closures, underscored the current anarchy, the shortcomings in legislation, and the failure to implement existing regulations in the insurance sector. The situation is particularly chaotic in the car insurance sector, which is the main source of scandal. The widely admitted lack of monitoring of insurance companies – supposedly conducted by the Development Ministry – combined with the short-term nature of car insurance contracts has allowed a disproportionately large number of insolvent businessmen to continue operating. The repercussions are disastrous. Despite the repeated, and often exorbitant, rises in insurance rates – which always exceed the inflation rate – insurees enjoy very poor services. On top of this, the deficit of the auxiliary surety fund (which covers the liabilities of the insurance companies that close down) already amounts to more than 147 million euros (50 billion drachmas). Insurance companies’ representatives are trying to shift this deficit onto the shoulders of citizens, as they are about to submit an unacceptable proposal for the introduction of an annual 5,000-10,000- drachma (15-30 euro) contribution on road taxes for all vehicles in order to support the car insurance companies’ auxiliary surety fund. In other words, they want car owners to cover the loss caused by the insolvent businessmen in the above sector. Losses have actually soared because of inadequate state monitoring, which allows the companies to continue their activity unchecked. This situation has to end. The State cannot allow irresponsible businessmen to establish insurance companies or leave them uncontrolled. The single monitoring of financial services (today it is conducted by the Bank of Greece, the Capital Market Commission and the Development Ministry, depending on the sector) which is also dictated by an EU directive, is a necessary first step even though many more have to follow. A radical change in the mentality of insurance companies is required, as well as a restructuring of state monitoring of these firms. It is not possible that 15-20 officials at the Development Ministry have been left to monitor the same companies for so many years – this is betrayed by the unacceptable nature of the present situation.
