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Greece Insurance Report Q1 2008
Business Monitor International, March 2008, Pages: 30
The Greece Insurance Report provides independent forecasts and competitive intelligence on Greeces insurance industry.
This report differs from its predecessors in that it includes BMI’s Insurance Business Environment Rating (IBER). The rating brings together a number of pieces of relevant quantitative data, together with BMI’s Country Risk Rating (CRR). It is now much easier to consider the business environment for the insurance sector in any one country relative to the business environment for other industries in that country that are surveyed by BMI, and the business environment for the insurance sector in other countries.
Greece’s IBER is 64.7. Relative to other countries in Central and Eastern Europe, it is quite an attractive insurance market for foreign insurers. On the negative side non-life and life penetration figures are very tame and these serve to lower Greece’s overall rating. However, on the whole, the economic outlook is upbeat. Government policies are likely to remain constant over the long term owing to the re-election of the incumbent New Democracy (ND) party in September 2007. The IBER is held back somewhat by the underdevelopment of the life segment and GDP volatility. It is also held back by the legal framework and bureaucracy.
Over the forecast period, we anticipate that non-life premiums will grow by 25% annually in euro terms and by 24% in US dollar terms. Life premiums are expected to increase by 12% annually in euro terms and by 11% in US dollar terms. The key drivers of growth in the non-life segment in 2007-2012 are the anticipated rise in nominal GDP from around US$343bn in 2007 to US$427bn in 2012 and an expected increase in non-life penetration from 1.15% of GDP to 2.70%. The key driver of growth in the life segment is the envisaged near doubling in life density from US$294 per capita in 2007 to US$500 per capita in 2012. Greece’s total population is increasing, albeit slowly.
The competitive landscape in both the non-life and the life segments is very open to foreign players. Both segments are open to participation by foreign groups, with eight cross-border firms operating in Greece’s non-life market, and six within its life market. By far the largest portion of the non-life market in Greece is motor vehicle insurance. Property and fire insurance comprises the second most important sub-sector, followed by accident and health insurance.
The government looks set to continue its reform agenda, which includes the privatisation of some state assets and educational reforms. In all, the outlook looks good in terms of political continuity, creating a stable environment for operators in the insurance sector. A key risk to this outlook is the reduced majority of the aforementioned re-elected ND party. Other key issues for insurers are the level of bureaucracy and issues inherent in the tax system. On the plus side, the financial infrastructure is solid and GDP looks healthy in the medium term.
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