Insurers Line Up to Compete in Healthcare

Insurers Line Up to Compete in Healthcare

Significant developments and rearrangements at the insurance sector are expected to take place within 2013, especially regarding health care, while the national healthcare system continues to deteriorate. Major insurance companies aim to “contain” the market; to protect it, in other words, from the severe recession through cost reduction.

Within this framework, the major Greek and foreign insurance companies operating in the Greek market… are “sharpening their swords” by offering health packages that cover the needs the State is unable to cover. Major international companies see opportunities in the Greek insurance sector and wish to “steal” the market leading position from domestic companies. ING is a recent example of such practices. ING returned after a two year absence in the health packages, and plans to compete against the National Insurance company for the leading position. Meanwhile, other major Greek companies try to “preserve” their market shares.

Under the current conditions, there is an enormous attempt in the insurance sector, to reduce the premiums, since it is estimated that this is the only way that will lead to the development of the market. “Reductions take place due to the fact that private facilities decrease costs, resulting to better prices offered by the insurance companies” underlined a high-ranking executive of a Greek insurance company, experienced in the healthcare contract.

However, insurance companies have greater…”troubles”. Supervisory demands are high, due to the new stricter regulative framework, and specific past claims are “eating away” profit margins. These are whole life-contracts signed prior to Greece’s entry in the Euro currency, which presented highly beneficial terms and especially low premiums. The same executive estimates that there could have been a reformation of the terms for the specific contracts when Greece changed its currency. Nowadays, insurance companies have contacted the relevant Ministry, regarding some rearrangements of the terms; however discussions are at a preliminary stage.

As regards to the new regulative framework and Solvency II Directive, it is scheduled to be implemented on January 1st, 2014. Nevertheless, it is a common secret that the implementation will be postponed up to 2016, or even later. Up until the total implementation of the new regulations, the insurance companies will not be operating uncontrolled. National Bank of Greece is becoming more strict on inspections, in an effort to somehow pave the way for the smooth transition into the new regulative framework.

The dramatic conditions in the Greek market indicate fears that small and middle-sized insurance companies will be “stifled”. These companies are presently under the pressure of increased capital needs and lack of cash flow. There are estimations that there will be a significant decrease in the number of insurance companies based in Greece (currently there are 55)..

The insurance companies which will remain will be the ones that will manage to “run” major risk management systems, realize appropriate investments and cover capital demands, according to the leading executive.

Click here to view the Greek article.

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