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The crisis has saved private insurance

07 August 2014 / 15:08:59  GRReporter
1462 reads

In the period 2008-2013 private insurance in Greece lost 22% of its activity and at the end of 2008 5.2 billion euro that, at the end of 2013, fell to 4 billion euro.

However, many investment funds want to invest in the Greek insurance market as they forecast significant prospects for its recovery and development.

As explained by the sector, the welfare state has collapsed. State spending on pensions, medications, social benefits and other hospital costs in recent years has decreased by 13 billion euro (from 50 billion euro in 2009 to 37 billion euro in 2013).

Private insurance companies have been called to fill this vacuum and the first signs are already encouraging, as the "Health" divisions of all insurance companies have reported around 20% growth on an annual basis.

In addition, the international practice of transforming the redistribution pension system into a capital system and from a social system of fixed payments into a system of fixed pension contributions will probably become another field of activity for insurance companies.

It is significant that the average index ratio in the insurance system before the crisis was 1.7 workers per 1 retiree, which is lower than the 2 to 1 ratio, considered as a viable, and much lower than the 3 to 1, ratio, required in order for the system to be healthy.

Moreover, the high unemployment levels and the PSI programme were added to the demographic problem in Greece and the inability of the budget to finance the deficits in the pension funds.

The car insurance sector has ceased to bear losses due to the reduced car traffic and the limited number of accidents and is now one of the most profitable sectors, and due to the insurance coverage of about 500 thousand uninsured cars, it will become even more stable.

Prospects

Greece is one of the European Union states with the lowest penetration of general insurance, as the insurance penetration index to GDP is about 1.2% or slightly higher than in only Romania and Lithuania.

The latest 2012 data show that the average general insurance penetration index to GDP in the 27 European Union member states was 2.44%, the United Kingdom, Slovenia, France, the Netherlands and Austria being the top five countries with the highest insurance penetration index of general insurance to GDP in the European Union.  

Moreover, Greece is one of the insurance markets in the European Union with the lowest penetration in the field of life and health insurance, the percentage of such insurance to GDP being 1.02%. In terms of this indicator Greece is followed by only Lithuania, Estonia, Bulgaria, Romania and Latvia, whereas its average value in the European Union is 5.5%. Within the European Union the largest share is held by the United Kingdom, Finland, Denmark, France and Sweden.

Tags: Private insurance companiesCrisisInvestment fundsInvestments
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