The European Insurance and Occupational Pensions Authority (EIOPA) is being asked to intervene, in order to re-examine the long-term sustainability of lifetime health insurance policies in Greece and to seek measures to protect the approximately 250,000 policyholders who continue to maintain their coverage, by Milena Apostolaki in her letter to EIOPA President Petra Hielkema.
As she points out, lifetime private health insurance policies in Greece were promoted for decades as permanent and lifelong contracts, without, however, capital reserves having been created to smooth the risks associated with aging, as is the case in corresponding European structures.
As a result, she notes, older policyholders are now facing significant and cumulative premium increases, with the result that 300,000 policyholders have been led to cancel their coverage, despite having paid their premiums for years.
The PASOK MP first raises the question of whether the supervision of these specific products has placed sufficient emphasis not only on the solvency of insurance companies but also on consumer protection throughout their life cycle.
As she states, the European framework of the Insurance Distribution Directive (IDD), and specifically Article 25 on Product Oversight and Governance (POG), provides for the regular review of insurance products, so that they continue to meet the needs and characteristics of the market to which they are addressed.
At the same time, she raises the question of whether the original design and pricing assumptions of lifetime contracts were sufficient to ensure the maintenance of coverage over time.
She underlines that the public announcement by the Hellenic Association of Insurance Companies that limiting annual premium increases to 7% would create an estimated deficit of €5 billion reasonably raises questions about the assumptions on which the design of these products was based.
“If the financial balance of the portfolios requires increases significantly higher than 7%, there is a risk that policyholders will be unable to maintain their coverage precisely when, due to age, they need it most,” she characteristically states.
The PASOK MP asks EIOPA to re-examine to what extent the absence of an aging reserve or another corresponding mechanism creates issues of policyholder protection and supervisory convergence, as well as whether further supervisory or regulatory measures are required.
At the same time, she asks that the possibility of taking measures be examined that would ensure fair transition options without adverse consequences for the approximately 250,000 remaining policyholders, so as to limit the risk of losing their private insurance coverage due to the age-related evolution of premiums.
Finally, she notes that the issue is to be raised before other European institutions as well, with the aim of a broader examination of its consequences for policyholders in Greece and ensuring consumer protection within the framework of the European Union.