Which are the primary law provisions regulating the private insurance market in Greece?
To provide (re)insurance services in Greece a company must meet a series of requirements set forth in Law 4364/2016 (hereinafter the “Insurance Regulation Act”), which implemented the Solvency II Directive. Such requirements include that (re)insurers must maintain their registered seat in Greece, operate in the form of a société anonyme or a mutual cooperative, and have as their exclusive object the provision of insurance services. The company must evidence that it meets the statutory capital requirements and a number of governance requirements. Its directors and officers must be fit and proper for the job. The Insurance Regulation Act further requires the disclosure of information by (re)insurers to the public, the BoG and EIOPA (the so-called “market discipline rules”), and specifies, along with the technical standards adopted by the European Commission, the kind of information that shall be included in the annual report on the undertaking’s solvency and financial condition, which is publicly disclosed. Acts 93/2016 and 94/2016 of the BoG’s Executive Committee require additional information that (re)insurers must submit to BoG. Apart from the Insurance Regulation Act, BoG has issued implementing regulatory decisions and adopted a number of EIOPA guidelines.
Law 489/1976 sets certain additional requirements for insurers operating the class of thirdparty motor liability insurance, including via passporting from another EEA jurisdiction. Namely, such insurers automatically become members of the Auxiliary Fund for Liability Insurance from Motor Accidents, to which they pay 6% of their gross written premiums in the third-party motor liability class. They also become members of the Motor Insurers’ Bureau. Said insurers also communicate to the BoG the name and address of all the claim representatives they appoint in the other EU member states where they are operating. Furthermore, under Law 3867/2010 Greek life insurers, Greek branches of third-country life insurers, and EU life insurers undertaking business in Greece through a branch or through freedom of services become members of the Greek Private Life Insurance Guarantee Fund (to the extent that they are not covered by respective guarantee funds in their home member states).
Are there restrictions on ownership of or investment in (re)insurers in Greece or any notification requirements in case of transfer of control of/acquisition of a stake in a (re)insurer?
According to Article 43 of the Insurance Regulation Act, any natural or legal person intending to acquire a qualifying holding in a (re)insurer or increase their participation in a (re) insurer to 20%, 1/3 or 50% of the undertaking’s share capital must notify BoG in writing by submitting the information listed in Act 120/2017 of the BoG Executive Committee on their identity, financial condition and source of the financial means they shall use to acquire the qualifying holding. The BoG shall grant its response on the proposed acquisition within two to three months after receiving the necessary information. BoG reviews and assesses the acquisition to ensure solvency and avoid the cross-border importation of financial distress into the local insurance market. This could happen for example if the local entity is solvent but the group acquiring it faces financial difficulties. Moreover, BoG shall grant authorisation only if the links between the (re)insurer and other individuals or legal entities do not obstruct the effective exercise of its supervisory powers.
Which are the minimum qualification requirements for directors and officers of (re)insurers?
The Insurance Regulation Act and relevant implementing acts provide that the persons engaged in the management of a (re)insurance company shall enjoy:
- good reputation, integrity and credibility;
- professional skills to fulfil their duties;
- experience in insurance matters, financial markets, governance systems, actuarial analysis and the applicable legislative framework.
The BoG assesses whether directors and officers possess the necessary qualifications on the basis of the information provided under Act 60/2016 of the BoG Executive Committee. The information includes a criminal record extract and details from the individual’s experience that may affect their ability to perform their duties effectively, or cause possible conflicts of interest (e.g. due to family members working in the same business).
What licences, authorizations or qualifications are required for (re)insurers to conduct business?
(Re)insurers registered in Greece and branches of non-EEA (re)insurers must obtain a licence from BoG before commencing their operations in the Greek market. BoG grants such a licence for specific classes, within six months of the date of the application. Said application must include:
- the insurer’s statutes and a business plan for a three-year term, containing the detailed information prescribed in Art. 16 of the Insurance Regulation Act,
- proof of availability of the statutory capital, and
- proof of the company’s compliance with the corporate governance requirements.
What are the statutory capital requirements for insurers?
Articles 50-106 of the Insurance Regulation Act prescribe the statutory capital requirements required for (re)insurers. The Solvency Capital Requirement (SCR) must be calculated at least once a year, on a “going concern” presumption, taking into account all quantifiable risks to which the undertaking is exposed, including both existing and new business expected to be underwritten over the following 12 months. The results of the SCR calculation are reported to the BoG. The Insurance Regulation Act also sets Minimum Capital Requirements (MCR), corresponding to an amount below which policyholders and beneficiaries would be exposed to unacceptable risk. The MCR cannot be lower than 25% or higher than 45% of the SCR, and in any case, less than €2.5 million for non-life insurers (including captives), €3.7 million for life insurers (including captives), €3.6 million for reinsurers and €1.2 million for captive reinsurers. Apart from SCR and MCR, the law contains rules concerning the calculation and formation of technical provisions and own capitals.
Which are the corporate governance requirements for (re)insurers?
The Insurance Regulation Act provides that Greek (re)insurers must comply with certain internal organisation requirements. These requirements are aligned to those of the Solvency II Directive and its implementing provisions. In this relevance, a (re)insurer’s corporate governance system shall be adequate and transparent. The duties for each function and office shall be clearly and appropriately allocated, and an efficient mechanism shall be in place to ensure the transfer of information within the company.
(Re)insurers shall adopt and maintain written policies concerning at least:
- their risk management system, containing strategies and procedures to identify, manage and report, on a continuous basis, the risks, at an individual and at an aggregate level, to which they are or could be exposed;
- their internal audit system, containing effective administrative and accounting procedures, internal audit framework, information functions, and a regulatory compliance function;
- their internal audit function, including assessment of the adequacy and efficiency of the internal audit system and the other corporate governance elements;
- the outsourcing of their functions.
The corporate governance requirements are further elaborated by the provisions of Act 60/12.02.2016 of the BoG Executive Committee, adopting the respective EIOPA Guidelines.
Which are the penalties for insurers in the event of non compliance?
The Insurance Regulation Act provides for both administrative and criminal sanctions for breach of law. The BoG shall apply the sanctions subject to the proportionality principle. It shall take into consideration the effect of the violation on the proper functioning of the insurance market and the systemic stability, the potential deterrence for future violations, the kind of the breach, the fault of the (re)insurer, and their degree of cooperation with the regulatory authority. Sanctions may be imposed to (re)insurers and their management members or third parties involved in a violation of the insurance law. The penalised party may challenge the penalty before administrative courts.
Which are the tax obligations the (re)insures and insured are subject to?
In Greece, premiums are subject to indirect taxation (‘insurance premium tax’ – ‘IPT’) of variable size depending on the insurance class, while some types of insurance are not subject to IPT at all. Reinsurance premiums are not subject to IPT. The IPT is paid by the policyholder together with the premium and the insurer transfers the collected tax to the tax authorities. Insurers operating in Greece by way of freedom of establishment or freedom of services are also subject to IPT, while a local tax representative shall be appointed by companies passporting via FoS. The insurance indemnity is subject to 2.4% stamp duty. Insurance money may be considered taxable income of the insured or a designated beneficiary or heir.
Can the insurer be subrogated on the insured rights?
In non-life insurance, the insurer is subrogated to the insured’s rights once it satisfies the insured and the latter is entitled to be indemnified by a third party which caused the damage. The insured’s right for indemnification is in this way transferred to the insurer, which can initiate proceedings in order to be compensated by the third party, up to the amount paid to the insured. The insurer cannot be subrogated to the claim against ascendants, descendants, spouse or persons who live with the insured, or his legal representatives, unless they have acted maliciously.
How are insurance intermediaries regulated in Greece?
Insurance mediation is currently regulated in Greece by Law 1569/1985 and Presidential Decree 190/2006, which transposed the EU Insurance Mediation Directive (2002/92/EC) into Greek law. Insurance mediation activity in Greece is further regulated by Act 86/2016 of the BoG Executive Committee, establishing the Code of Conduct of (Re)Insurance Intermediaries, while Act 89/2016 of the Bank of Greece Executive Committee regulates the complaints handling procedure for insurance intermediaries.
The Draft Law for the transposition of the Insurance Distribution Directive (Directive 2016/97/EU – IDD), which at the time these lines are drafted has not yet reached the Hellenic Parliament, brings about significant changes in the Greek (re)insurance distribution market, and further obligations on (re)insurance distributors, which include insurance in396 termediaries, ancillary insurance intermediaries as well as the insurance undertakings if they directly sell insurances.
According to the Draft IDD Law, the category of the “subagent”, in which category the most registered intermediaries are registered, is abolished. The following categories of intermediaries shall be registered forthwith:
- insurance agents;
- coordinators of insurance agents;
- insurance brokers; and
- ancillary intermediaries.
A broker cannot also be an agent, while an agent, a coordinator and a broker cannot also be an ancillary intermediary. The cooperation between intermediaries is permitted only if they are of the same category. Similarly, an agent, a coordinator and a broker cannot be a general director, director or representative of a (re)insurer. The intermediaries shall be registered in the Special Registries of the local Chambers of Tradesmen or the Trade Departments of Commercial Chambers, while the Central Union of Greek Chambers shall organise the Single Information Point with cumulative information from all Special Registries. The Single Information Point shall be linked to the EIOPA site.
The Draft IDD Law requires the distributors to act fairly and professionally in accordance with their clients’ best interest, to provide specific information to them, and to avoid unfair competition practices both pre-contractually and throughout the term of the insurance agreement.
The Draft IDD Law also provides that insurers:
- may certify the necessary knowledge and skills requirements of the ancillary insurance intermediaries they cooperate with;
- must execute a written cooperation agreement with the intermediaries;
- must pay compensation to the agent or coordinator, upon termination of the cooperation agreement, equal to the commission corresponding to the intermediary’s insurance production for three years following the termination, provided that said production remains with the insurer; such compensation is also payable to them when they retire;
- must pay an amount equal to the commission of four years in the event of total incapacity or death.
When a client pays the premium to an intermediary in good faith, he/she is protected against the insurer as this is considered to be proper payment. By contrast, the insurer is only considered to have settled its obligations to the client when the client actually receives the insurance money.
Which are the administrative sanctions provided by the Draft IDD Law?
The Draft IDD Law provides for a range of administrative sanctions from a reprimand to a fine up to €5 million or 5% of the total annual turnover, or twice the amount of the profits gained or losses avoided, or even a temporary or permanent deletion of the intermediary from the Special Registry. If the distributor is a legal entity, sanctions may be also imposed on the person(s) responsible for the insurance distribution activities, and on any other person deemed responsible for the violation, whereas in the case of insurers, sanctions may be imposed on the members of their management. Administrative sanctions, when imposed, shall be published on the BoG’s website, or shall be notified to EIOPA.
Online aggregators: operational requirements under Greek Law
Online aggregators operate a website or other media and provide information, in an organised manner, concerning several competing insurance products of various underwriters.The information is made available on the basis of key-word selections made by the interested customer. It has the form of an insurance product ranking list and includes price and product comparison. The customer has the option to purchase insurance directly through the website. Alternatively, he may be diverted to the insurer’s website and conclude an insurance contract there. Once this possibility to conclude a contract is provided, the aggregators qualify as insurance intermediaries. They are subject to the respective regulatory requirements, such as the obligation to provide on the website the necessary pre-contractual information package, information on complaints handling process, the contact persons, information on the insurers, a clear description of the insurance products in such a way that consumers can compare them, and the policy terms (via a hyperlink or a mark point of an electronic document), in order for the purchaser to be well informed before he purchases the insurance product.
