Closing the “Black Holes” in the Motor Sector

Closing the “Black Holes” in the Motor Sector

The fact that each policy will be renewable, only if paid in advance, will lead to a reduction in uncollected premiums.

Significant benefits will be brought to insurers, under the new policy framework in the motor sector, which is already in effect and “cancels” automatic policy renewal, makes temporary insurance card optional and establishes electronic communication between insured, intermediaries and insurers.

According to market factors, the abolition of the automatic renewal of policies is expected to improve insurers’  loss ratio by about 7% and significantly enhance profit margins, in difficult, due to crisis, economic conditions.

At the same time, the fact that each policy will be renewed when paid in advance, will lead to a decrease in uncollectible premiums, a boost in market liquidity, and also a reduction in claims reimbursed by insurers for accidents that occur up to 75 days after policy expiration.

According to the new law provisions, the driver is considered uninsured from the 1st day after the expiration of his policy, if he does not pay the renewal, while the insurer is required to cover the insured only for the first 16 days after the expiration date of the policy that was not renewed.

It is important to note, that the application of the above provisions helps insurers adapt more easily to the new regulatory environment introduced gradually with Solvency II.

Click here for the Greek article.

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