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Greece Insurance Report Q3 2011
Business Monitor International, June 2011, Pages: 74
Greece Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Greece's insurance industry.
- The overall insurance sector remains quite resilient in the face of Greece’s alarming financial, economic and political problems.
- Published results in relation to calendar 2010 year have generally been surprisingly good.
- The main risk is an escalation of the financial crisis and the recession, which hits life premiums hard.
- By the end of the forecast period, Greece’s insurance sector will likely remain underdeveloped by most metrics.
The relentless wave of bad news surrounding Greece’s economic, financial and political problems has obscured the strengths of its insurance sector. The results released by the major insurers in February and March 2011, in relation to calendar 2010, indicated that premiums have remained resilient in both the life and the non-life segments. Some companies suffered from diminishing premiums or profitability, but the problems have by no means been uniform. Many companies reported that they were able to develop their businesses. The insurance sector benefits from the widespread presence of regional and global multinational companies. These groups can leverage their scale across Central, Eastern and often Western Europe, and access global capital markets. The overall regulatory environment is also being strengthened.
Unfortunately, though, there is no obvious reason why non-life penetration or life density should rise from levels that are low by the standards of countries where overall income levels are as low as they are in Greece.
The results that are available indicate that 2010 was a challenging but not disastrous year for most of the companies in Greece’s life segment. Some groups reported double-digit declines in sales through particular channels. However, it was more usual for companies to report stability in their overall business and quite often growth in particular lines or distribution channels. Four years ago, it may have been possible to identify reasons why life density should grow from what are fairly (but, in a Central and Eastern European context, not very) low levels. Now it is apparent that life insurance does not represent a major vehicle for long-term savings by Greek households. There is a real possibility that density and premiums will decline quite sharply if the economic and financial problems are worse than we anticipate.
The non-life segment appears to have been resilient in the face of economic and political turmoil. This is partly a consequence of the non-discretionary nature of many of the lines, such as compulsory motor third-party liability (CMTPL) cover. However, some companies reported that they achieved double-digit growth in premiums in 2010, whether through the introduction of new products or from the expansion of their market shares by other means. Overall, we consider the non-life segment to be less vulnerable than the life segment to shocks arising from deterioration in Greece’s financial and economic situation.
Nevertheless, we cannot see why there should be a significant rise in non-life penetration over the forecast period.
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