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Market spotlight

Trends and prospects

What are the current trends in and future prospects for the insurance and reinsurance markets in your jurisdiction?

The Bank of Greece is the insurance supervisory authority in Greece. Pursuant to its 2017 to 2018 Monetary Policy Report, as of 31 December 2017, the Bank of Greece supervised 42 Greek insurers, of which three were life insurers, 22 were general insurers and 17 were composite insurers. In addition, according to European Insurance and Occupational Pensions Authority data, 183 EU insurers undertake business in Greece under the freedom of establishment or the free operation of services regime.

Premium production amounted to €3.7 billion in 2017. This was shared almost equally between life and non-life insurance. A growth of 3.5% was recorded in the first quarter of 2018, compared to the corresponding period of 2017.

As of 31 December 2017, the aggregate assets of Greek insurers amounted to €16.9 billion, of which €7.6 billion was invested in government bonds and €2.4 billion corresponded to unit-linked funds with the policyholder’s own risk. Total liabilities amounted to €13.4 billion, while technical provisions amounted to €12.2 billion, of which €3.1 billion was for non-life contracts and €9.1 billion was for life contracts. Despite the financial issues that the country has experienced in recent years, the Greek insurance market has a good solvency record, with 95% of the eligible capital classifying in Tier 1.

Pursuant to the 2017 Report of the Hellenic Association of Insurance Companies, premiums correspond to 2.1% of gross national income (based on 2016 data). The market share of social insurance is larger than in other EU countries, a fact which negatively affects the percentage of gross domestic product taken up by insurance. Although there appears to be no government support for the passing of regulations in favour of the development of professional pension schemes, the insurance market is optimistic that, owing to the weaknesses of the social security system, this will be the next growth area, along with health insurance.

Regulatory framework

Legislation

What is the primary legislation governing the (re)insurance industry in your jurisdiction?

The regulatory framework governing (re)insurers was radically modified by Law 4364/2016, which harmonised Greek law with the EU Solvency II Directive (2009/138/EC). In implementing the new law, the Bank of Greece – in its capacity as the regulatory authority for the Greek private insurance sector – issued a series of relevant regulatory decisions and adopted a number of European Insurance and Occupational Pensions Authority guidelines. The EU implementing regulations for the EU Solvency II Directive have direct effect. For issues not explicitly regulated by Law 4364/2016, the law on Sociétés Anonymes (Law 4548/2018) applies.

The Insurance Contract Act (2496/1997) regulates issues concerning insurance contracts. Third-party liability motor insurance is governed by Law 489/1976, which is codified by Presidential Decree 237/1986. Insurance mediation activity is regulated by Law 1569/1985 and Presidential Decree 190/2006 (which transposed the EU Insurance Mediation Directive (2002/92/EC) into Greek law). The Ministry of Economy and Development circulated a draft bill implementing the EU Insurance Distribution Directive (2016/97/EC) for public consultation. The consultation has been concluded, but the draft bill has yet to pass through Parliament.

Greek undertakings may also have to comply with soft law rules, such as the Code of Conduct for Listed Companies, issued by the Hellenic Federation of Enterprises. 

Regulators

Which government bodies regulate the (re)insurance industry in your jurisdiction and what is the extent of their powers?

The Bank of Greece Department of Private Insurance Supervision is the competent authority for supervision of the private (re)insurance sector. The object and extent of the supervision and the Bank of Greece’s supervisory powers are outlined in Law 4364/2016. The Bank of Greece supervises the insurance sector on a preventive and corrective basis and has the power to take all appropriate and necessary measures to ensure compliance with the applicable provisions. Its supervisory powers are subject to the proportionality principle, which is expressly mentioned in the law and creates a legal obligation for the Bank of Greece and a right for the supervised undertakings. The corporate supervision of insurers is undertaken by the Ministry of Economy and Development. 

Ownership and organisational requirements

Ownership of (re)insurers

Are there any restrictions on ownership of or investment in (re)insurers in your jurisdiction, including any limits on foreign ownership/investment?

There are no restrictions on ownership of or investment in (re)insurers in Greece. However, within the framework of the EU Solvency II Directive (2009/138/EC), the Bank of Greece will not authorise the acquisition of qualifying holdings in a (re)insurer if it is not satisfied as to the qualifications of the shareholders, including related parties. The assessment of qualifications for the acquisition or increase of qualifying holdings takes place in accordance with Act 120/2017 of the Bank of Greece Executive Committee, which outlines the information that must be submitted and the procedure for the prudential assessment. The act makes available template forms for the submission of the necessary information. The Bank of Greece also takes into account the principles laid down in the European Supervisory Authorities’ Joint Guidelines on the Prudential Assessment of Acquisitions and Increases of Qualifying Holdings in the Financial Sector (JC/GL/2016/01), as well as the results of cooperation with other EU supervisory authorities where relevant. 

If there are close links between the (re)insurer and other individuals or legal entities, the Bank of Greece will grant authorisation only if those links do not prevent the effective exercise of its supervisory powers.  

What regulations, procedures and eligibility criteria govern the transfer of control of/acquisition of a stake in a (re)insurer?

According to Article 43 of Law 4364/2016, 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%, one-third or 50% of the undertaking’s share capital must notify the Bank of Greece in writing. With respect to individuals acquiring qualifying holdings, and subject to Act 120/2017, the Bank of Greece may request information on the identity, financial condition and origin of the financial means of these persons. In the case of legal entities, it may require, next to information on the legal entity, information on the individuals with direct or indirect control over the legal entity and the ultimate beneficial owner provided that no listed entity breaks the line. Article 43 of Law 4364/2016 sets out the procedure and the timeframe within which the Bank of Greece must authorise or prohibit the qualifying holding’s acquisition. The Bank of Greece makes use of information obtained from other EEA supervisory authorities to assess the qualifications of foreign-interested acquirers. Judging from its regulatory practice, the Bank of Greece wants to avoid financial distress being placed on a local insurer on foreign acquisition when the local entity to be acquired is solvent and the acquirer’s group is in financial difficulty.

Organisational requirements

Must (re)insurers adopt a certain legal structure in order to operate? If no mandatory company organisation applies, what are the common structures used?

Greek (re)insurers may take the legal form of a société anonyme or a mutual association. Greek life insurers may take the legal form of a société anonyme.

Law 4364/2016 introduces the corporate governance system for (re)insurers in accordance with the Solvency II framework. It sets out:

  • how (re)insurers can create internal procedures to ensure efficient operations;
  • the fit and proper requirements for members of the administration or the persons who occupy key functions in the company;
  • the characteristics and objectives of the main systems that (re)insurers must have in place, including the risk management system, the internal control system, the internal audit function and the actuarial function; and
  • rules for outsourcing processes.

These rules are supplemented by the Solvency II Implementing Regulations.

Do any particular corporate governance requirements apply to (re)insurers, including any eligibility criteria for directors and officers?

Law 4364/2016 sets the minimum criteria for the directors who can serve on the board of a (re)insurer. Directors must have a good reputation, integrity and credibility, and be trustworthy. They must be professionally competent to fulfil their duties and cumulatively hold experience in insurance matters, financial markets, governance systems, actuarial analysis and the applicable legislative framework. Article 31 of Law 4364/2016, implementing Articles 42 and 43 of Solvency II, describes the necessary qualifications for members of the board of directors and the specific requirements for persons who effectively run the undertaking or have other key functions.  

The Bank of Greece provides guidance on the tests that it applies to assess whether directors and officers possess the necessary qualifications. Act 60/2016 of the Bank of Greece Executive Committee asks for documented information including an extract of the individual’s criminal record and details from his or her experience that may affect their ability to perform their duties effectively. Any possible conflicts of interest due to close family members working in the same business field should be reported. The questionnaire is also available in English to facilitate the process for any foreign directors or officers. Although legal quotas have been imposed that make international work experience an obligation for bank directors, no such restrictions apply in the insurance sector.

Law 3213/2003 requires resident executive directors and key officers of insurers to report annually to the money laundering authority information about their income and financial assets (as it does for members of parliament, public officers, mass media owners and other categories of person).  

Operating requirements

Authorisation procedure

Which (re)insurers must obtain authorisation from the regulator before operating on the market and what is the procedure for doing so?

Only licensed (re)insurers may legally operate in the Greek market. (Re)insurers registered in Greece and branches of non-European Economic Area (re)insurers must obtain a licence from the Bank of Greece before commencing operations.

The licence is granted for the specific classes in which the applicant intends to operate. The applicant submits the company statutes and a business plan for the classes of insurance in which it intends to operate, including projected financial statements for the next three financial years, predictions for the solvency capital requirements and the minimum capital requirements that it will maintain and the calculation methods for such predictions.

The business plan must also include the basic principles of reinsurance that the undertaking will apply, its own basic funds to cover the minimum capital requirements and predictions regarding establishment costs.

The applicant must provide evidence that it will be able to fulfil the quantitative requirements described in Law 4364/2016 and that it will comply with the corporate governance requirements of the law. Additional information is required if the insurer intends to practise certain specific classes of business, such as third-party motor liability.

Licences for new entrants on the market are issued for either non-life or life insurance activities (ie, not for composites). The Bank of Greece must decide on the licence application within six months of submission of a complete request. 

Financial requirements

What are the minimum capital and solvency requirements for (re)insurers operating in your jurisdiction?

Chapter F of Part 1 of Law 4364/2016 (Articles 50-106) is devoted to describing the quantitative (first pillar) requirements that (re)insurers must fulfil.

Articles 76 to 100 of Law 4364/2016 refer to the solvency capital requirements. As a general rule, the solvency capital requirements must be calculated at least once a year on the presumption that the undertaking will pursue its business on an ongoing basis and ensure that all quantifiable risks to which it is exposed are taken into account, covering both existing business and new business expected to be underwritten over the following 12 months. The solvency capital requirements may be calculated either in accordance with the standard formula or based on an internal model. The results of the calculation are reported to the regulator.

  • Articles 101 to 102 of Law 4364/2016 specifically refer to the minimum capital requirements – an amount of eligible basic own funds below which policyholders and beneficiaries would be exposed to an unacceptable level of risk. The absolute floors are:
  • €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.

The minimum capital requirements for composite insurers that operate specific legal provisions are the sum of the above mentioned amounts for each category.

Subject to the above limits, the minimum capital requirements must be no lower than 25% and no higher than 45% of the solvency capital requirements of the (re)insurers. 

Do any other financial requirements apply?

Chapter F of Part 1 of Law 4364/2016 (Articles 50-106) transposes the first pillar of the EU Solvency II Directive (2009/138/EC), including the quantitative requirements with which (re)insurers must comply. Apart from the methods of calculating the solvency capital requirements and the minimum capital requirements, the first pillar includes rules concerning:

  • the valuation of assets and liabilities;
  • the calculation of the technical provisions of (re)insurers;
  • the determination of the own funds of a (re)insurer and their categorisation; and
  • the investments that a (re)insurer is allowed to make.  

Personnel qualifications

Are personnel of (re)insurers subject to any professional qualification requirements?

According to Article 31(1) of Law 4364/2016, the persons that undertake key functions of the (re)insurer must fulfil the fit and proper requirements that apply for the members of the board of directors (or other administrative body) of the undertaking, as set out in Article 31 of Law 4364/2016 and Act 60/2016 of the Bank of Greece Executive Committee. Actuaries and auditors must abide by the professional qualification standards set out by law, as must other qualified professionals employed by insurers (eg, specialised surveyors and lawyers).

The draft law on the implementation of the EU Insurance Distribution Directive (2016/97/EC) provides further requirements in respect of the employees of insurers who are engaged in the distribution of insurance products.

Business plan

What rules and requirements govern the business plans of (re)insurers?

The (re)insurer’s business plan must be submitted when it seeks either initial authorisation or the extension of its licence to a further business class. Article 16 of Law 4364/2016 reiterates the provisions of Solvency II regarding the required content of the business plan. This must include information that will allow the regulator to assess whether the licensing requirements are met:

  • on the basis of the nature of the risks or commitments which the insurer intends to cover; and
  • in light of its initial expenditure, retrocession prospects and financial, governance and operational projections for the first three years of operation. 

Risk management

What risk management systems and procedures must (re)insurers adopt?

Greek (re)insurers must maintain an effective risk-management system comprising the strategies, processes and reporting procedures necessary to identify, manage and report, on a continuous basis, the risks, at an individual and at an aggregated level, to which they are or could be exposed, and their interdependencies. The risk management system must cover both the risks included in the calculation of the solvency capital requirements and the risks not or not fully included in the calculation thereof, and at least the areas of underwriting and reserving, asset-liability management, investment (particularly derivatives and similar commitments), liquidity and concentration risk management, operational risk management, reinsurance and other risk mitigation techniques. (Re)insurers must adopt a written policy on risk management that addresses all of these points. 

Reporting and disclosure

What ongoing regulatory reporting and disclosure requirements apply to (re)insurers?

Part 1, Chapter D, Section 3 of Law 4364/2015 transposed the provisions of the third pillar of Solvency II. These establish the obligations for disclosure of information to the public, the Bank of Greece and the European Insurance and Occupational Pensions Authority, and the market discipline rules in the private insurance sector. They detail the information which must be included in the annual report on the undertaking’s solvency and financial condition, which is publicly disclosed. They also regulate the conditions under which certain information may not be disclosed by the undertaking, as well as the powers of the Bank of Greece to require the disclosure of supplementary information or clarifications.

With respect to the exact form and standard templates for the annual report and the regular submission of information to the national regulatory authorities, Greek (re)insurers must comply with the implementing technical standards adopted by the European Commission. The information and reports that must be submitted by Greek (re)insurers to the Bank of Greece for supervisory purposes are further detailed in Acts 93/2016 and 94/2016 of the Bank of Greece Executive Committee. Notably, following the first publication of the reports in Summer 2017, insurers operating in Greece have suggested that the technicality level of the published information is too high to help consumers wishing to assess the financial condition of insurers operating in the market. Therefore, they are interested in developing a more consumer-oriented information tool. 

Other requirements

Do any other operating requirements apply in your jurisdiction?

According to Article 18 of Law 489/1976, Greek insurers operating in the class of third-party motor liability insurance, including via passporting, automatically become members of the Auxiliary Fund for Insurance of Liability Arising out of Motor Accidents, to which they pay 6% of their gross written premiums in the third-party motor liability class. In addition, they automatically become members of the Motor Insurers’ Bureau, to which they also pay a contribution. 

Greek insurers intending to undertake third-party motor liability business must communicate to the Bank of Greece the name and address of all claim representatives which they appoint and use in other EU member states.

Greek life insurers and Greek branches of third-country life insurers mandatorily become members of the Greek Private Life Insurance Guarantee Fund under Law 3867/2010. EU life insurers undertaking business in Greece through a branch or through freedom of services become members of this fund to the extent that they are not covered by respective guarantee funds in their home member states. The guarantees that the insurance beneficiaries of insolvent life insurers will be compensated, even if to a limited extent. 

Non-compliance

What are the consequences of non-compliance with the operating requirements applicable to (re)insurers?

Law 4364/2016 provides for administrative and criminal penalties in the event of non-compliance with the applicable insurance law provisions.

With respect to administrative penalties (Law 4364/2016), the Bank of Greece has wide discretionary powers which are exercised under the scrutiny of proportionality, and which take into account criteria such as:

  • the effect of the violation on the proper functioning of the insurance market;
  • the risk to the systemic stability;
  • the avoidance of future violations; and
  • the willingness to cooperate with the regulatory authority.

Penalties may include fines to (re)insurers and their administration members or third parties involved in violating the laws governing insurance or insurance mediation. For example, the imposition of:

  • a fine of up to €2 million on a (re)insurer, its administration members or any other individual or legal entity violating any EU or national insurance law provision;
  • a fine of up to €200,000 on a (re)insurer, its administration members or any natural or legal person refusing to cooperate or obstructing a research or audit;
  • a fine of €100,000 (rising to €300,000 in case of repeat offence) on any natural or legal person violating the law on third-party motor liability insurance or insurance mediation; and
  • special administrative penalties if a qualifying holding is acquired in breach of Law 4364/2016.

Special fines apply under more specialised provisions (eg, third-party motor liability insurance law).

Article 258 of Law 4364/2016 sets out the violations of the applicable insurance law provisions that may lead to imprisonment and other criminal penalties.

Administrative penalty decisions are subject to the scrutiny of administrative courts when challenged by the penalised party.  

Contracts

General

What general rules, requirements and procedures govern the conclusion of (re)insurance contracts in your jurisdiction?

The Insurance Contract Act (2496/1997) governs insurance contracts and sets out the minimum content of the policy (Article 1(2)), including general and special terms. The Civil Code rules on the formation of contracts also apply in the absence of special insurance law provisions. Written form is not a prerequisite for the validity of an insurance contract; however, it is necessary to evidence the contract before the courts. Nevertheless, the law requires the insurer to provide the policy, including any applicable general and special terms, to the policyholder in written form, whereas the omission to provide it entitles the policyholder to rescind the contract.

The insurance contract terms must conform to the request for insurance, otherwise the insured is entitled to object to them within the time limit set by law. In addition, policyholders have a cooling-off period (30 days for life contracts and 14 days for non-life contracts) during which they may rescind the contract without any extra cost, provided that they have been so advised by the insurer; if they have not been so advised, rescission may occur within the next 10 months.

The policy terms must take into account the reasonable interests of the policyholder and the insured, and must be clear and easily readable. Consumer contracts are also subject to the consumer law provisions, which are harmonised with EU law, with special emphasis on policies concluded over the Internet, to which specific rules apply. Under Greek law, documents may be in paper or electronic form. 

Mandatory/prohibited provisions

Are (re)insurance contracts subject to any mandatory/prohibited provisions?

(Re)insurance contract terms are not subject to prior regulatory review, approval or regular notification to the Bank of Greece.

The Insurance Contract Act provides guidance on the balancing of rights and obligations between the insurer and the insured, primarily with respect to consumer contracts. A number of provisions which introduce protective rights in favour of the policyholder, the insured or the beneficiary can be contractually structured in commercial covers regarding cargo transfer insurance, commercial credit, or sea and air non-life insurance.

Recent legislation on compulsory insurance, including third-party motor liability insurance, makes it mandatory for the insurer to receive payment of the premium first and then deliver the policy and start the cover. This provision is contrary to the general provisions of the Insurance Contract Act, which leaves it to the parties to agree the commencement of the coverage irrespective of prior payment of the premium. However, it seeks to ensure the streamlined operation of the motor liability insurance market to the benefit of the general public. 

Implied terms

Can any terms be implied into (re)insurance contracts (eg, a duty of good faith)?

Article 281 of the Civil Code establishes the duty of good faith in contractual relations, reading: “The exercise of any right is prohibited if it exceeds the limits set by good faith, by the commonly accepted principles of the society and by the social and economic purpose of the right.”

This term can be implied by the courts in any contract; there is settled case law clarifying the duty of good faith in contractual relations. According to the Insurance Contract Act, all of its provisions are ’semi-compulsory’ in the sense that they operate in favour of the policyholder. Thus, policy terms in consumer contracts which are detrimental to the policyholder, insured or beneficiary will be null and void unless otherwise specifically stipulated in the Insurance Contract Act.

Standard/common terms

What standard or common contractual terms are in use?

Standard, pre-defined general contract terms have been the subject of litigation between insurers and consumer associations following the challenge of a number of terms as abusive under consumer protection law. The main areas of concern have been unclear and non-transparent contract terms with respect to premium increases, and the denial of cover due to the non-disclosure of circumstances material to assessment of the risk.

Smart’ contracts

What is the state of development in your jurisdiction with regard to the use of ‘smart’ contracts (ie, blockchain based) for (re)insurance purposes? Are any other types of financial technology commonly used in the conclusion of (re)insurance contracts?

Greek insurers are closely monitoring developments in the financial technology sector and are gradually implementing them into their insurance activities. However, blockchain (‘smart’) contracts are not commonly used for the conclusion of insurance contracts, the implementation of a contract or the payment of insurance indemnity. The use of e-policies is growing rapidly, as is the aggregation business. In general terms, aggregators seem to provide a satisfactory level of transparency in the way in which they compare available competitive policy options. 

Breach

What rules and procedures govern breach of contract (for both (re)insurer and insured)?

The policyholder may rescind the contract or object to the policy terms within 14 or 30 days from delivery of the policy, depending on the kind of insurance. The effects run retroactively from the date of signing, and either terminate the contract from the outset or apply modified terms in the case of objections based on deviation of the policy terms from the requested cover.

In the event of misrepresentations by the policyholder regarding objectively essential features of the risk, the insurer may either request the modification of the policy or terminate it by serving a notice in writing, in which case the legal effects of the termination will come into effect within a period of weeks thereof. If the inaccurate information has been provided intentionally, the termination notice shall have immediate effect.

According to Article 8(5) of the Insurance Contract Act, the insurance policy may provide for termination reasons other than those explicitly regulated by the act. Termination by the insurer does not become effective until 30 days after notice of termination has been served. Special provisions apply in case of termination of third-party motor liability insurance and marine insurance contracts. 

Consumer protection

Regulation

What consumer protection regulations are in place to safeguard the rights of purchasers of insurance products and services?

According to Article 33 of the Insurance Contract Act, any agreement limiting the rights of the policyholder, insured or beneficiary is considered to be null and void. The Consumer Protection Law (2251/1994, codified by Ministerial Decision 5338/17.1.2018), which transposed the EU Consumer Directives into Greek law, also applies. Article 4i of the law regulates the conclusion of insurance contracts through distance communication. Its provisions are more favourable than those of the Insurance Contract Act in certain matters (eg, the delivery of the general policy terms). These must be delivered to the prospective client before the conclusion of the contract, while under the act it suffices that they are delivered together with the policy. 

Claims

General

What general rules, requirements and procedures govern the filing of insurance claims?

The Insurance Contract Act requires that an insurance claim be notified to the insurer within eight days of the date when the policyholder becomes aware of the occurrence of the risk. In the event of delayed notification, the insurer cannot deny cover, but is entitled to any damage it has suffered due to the delay. Following the occurrence of an insured event, the policyholder must take all appropriate measures to avoid or mitigate the insured loss and to comply with the insurer’s instructions. 

Time bar

What is the time bar for filing claims?

Claims arising out of an insurance contract are prescribed after the lapse of four years in the case of non-life insurance and five years in the case of personal insurance, starting from the end of the calendar year within which the claim arose. Third-party motor liability claims prescribe within five years of the date of the accident.

Denial of claim

On what grounds can the (re)insurer deny coverage?

The insurer is entitled to refuse to pay insurance money:

  • if the policyholder intentionally violated its obligation to inform the insurer of any information or circumstance objectively material for the assessment of risk;
  • if the policyholder intentionally caused a significant aggravation of the insured risk;
  • if the insured event occurred due to an intentional act or omission or gross negligence of the policyholder, the insured, the persons dwelling with them, their legal or other representatives or third parties entrusted professionally to safeguard the insured interest in case of indemnity insurance; or, in case of personal insurance, if the insured event occurred due to an intentional act or omission of the above listed persons; or
  • in case of exemptions from the insurance cover agreed in the insurance contract.  

What rules and procedures govern the insured’s challenge of the denial of a claim?

Greek law does not provide for special procedures regulating the resolution of insurance-related disputes. The ordinary procedure for the judicial resolution of commercial disputes should be followed, as provided by the Code of Civil Procedure. A special division of the substantive courts deals with road accidents and third-party motor liability claims, aimed at the quicker resolution of the disputes. 

Third-party actions

On what grounds can a third party file a claim directly with the (re)insurer?

(Re)insurers cannot be sued directly, neither can insurers, unless this is expressly provided by law, as in the case of third-party motor liability claims with respect to insurers. Where no direct action is available, insurers are called to participate in the trial by way of joinders or by the “deviated” action of the Code of Civil Procedure, under which the insurer is called to pay the third party’s creditor.  

Punitive damages

Are punitive damages insurable?

Greek law does not recognise the concept of punitive damages in the sense of paying a penalty to the damaged party. Penalties are provided only by criminal law provisions and are payable exclusively to the state. Hence, punitive damages are not included in insurable risks in Greece. However, if the indemnity is defined according to a foreign law which recognises punitive damages, these could be included in the insurance indemnity or adequate provision to the contrary must be made in the policy.

Subrogation

What regime governs (re)insurers’ subrogation rights?

In cases of non-life insurance where the insurer performs its contract and satisfies the insured, while the insured also is entitled to indemnification by a third party which caused the damage, the rights of the insured against the third party are automatically transferred to the insurer, which can initiate proceedings to be satisfied by the third party to the extent of the indemnity paid to the insured.

The insurer cannot be subrogated in the insured’s rights against its ascendants, descendants, spouse or persons who live with the insured, or its legal representatives, unless they have acted maliciously. The insured or the policyholder must preserve rights against third parties in favour of the insurer. Violation of this obligation entitles the insurer to claim damages. If the policy is concluded for business purposes, the parties may agree that the insurer will be released from any obligation should its subrogation right be called off.

The reason for the subrogation is that in non-life insurance, the insured cannot be made richer after the insured risk has occurred (ie, it cannot use the damage as a cause for enrichment). Hence, it can be indemnified only once for the same damage. Subrogation is an assignment of rights provided by the law. It is also usual to agree contractually that the payment of the insurance indemnity confers on the insurer all material and procedural rights of the insured.

Intermediaries

Regulation

How are the services of insurance intermediaries regulated in your jurisdiction?

Insurance mediation activities are subject to Law 1569/1985 and Presidential Decree 190/2006, which transposed the EU Insurance Mediation Directive (2002/92/EC) into Greek law. Brokers, agents, subagents and coordinators of intermediaries are active in the Greek market, of which the three latter categories represent the client. They are admitted through examinations and registered in specific registers. 

The EU Insurance Distribution Directive (2016/97/EC) was due to be transposed into national law by 1 July 2018 and will enter into force by 1 October 2018. A draft law for its transposition was made available on 21 June 2018 for public consultation and is expected to reach Parliament in September 2018. As a general note, the draft law introduces significant changes to the Greek (re)insurance distribution market, as well as enhanced obligations for (re)insurance distributors. For example, the sub-agent category, which includes a large number of registered intermediaries, will be abolished. Steps have been taken to differentiate more clearly between the activities of insurance agents representing insurers and insurance brokers. Commission has not been abolished as a form of compensation for intermediaries; however, from a conflict of interest perspective, it is countered by stronger obligations regarding disclosure and advice by intermediaries. In the meantime, a single (re)insurance mediators register has been established, which combines the content of all local registers and is linked to the European Insurance and Occupational Pensions Authority’s website.

Secondary legislation on intermediaries includes:

  • Act 86/2016 of the Bank of Greece Executive Committee, which established the Code of Conduct of (Re)Insurance Intermediaries; and
  • Act 89/2016 of the Bank of Greece Executive Committee, which regulates the complaints handling procedure for insurance intermediaries.  

Tax

Tax liability

What tax liabilities arise in the conduct of (re)insurance business?

In Greece, premiums are subject to indirect taxation and insurance money is subject to stamp duty. Premiums are not subject to value added tax, but are subject to a turnover tax (‘premium tax’) of variable size depending on the insurance class, which constitutes a burden on the policyholder and is paid together with the premium. The collected tax is then paid to the fiscal authority by the insurer. Some types of insurance are exempt from premium tax (eg, life insurance with a duration of more than 10 years). Reinsurance premiums are not subject to premium tax.

Policies sold by European Economic Area insurers by way of freedom of services are subject to Greek indirect taxation, and a local tax representative shall be appointed.

Insurance money may be considered taxable income of the insured or a designated third beneficiary or heir. Moreover, stamp duty of 2.4% is imposed on the payment of insurance money.   

Insolvency

Regulation

What regime governs the insolvency of (re)insurers?

(Re)insurers in financial difficulty or in an irregular situation are subject to Articles 107 to 114 of Law 4364/2016, which transposed the respective provisions of the EU Solvency II Directive (2009/138/EC). In the event that financial difficulties lead to the revocation of the undertaking’s authorisation, Articles 220 to 248 of Law 4364/2016 apply, which govern the reorganisation and winding-up of insurers. 

Effect on insureds

How does a (re)insurer’s insolvency affect insureds and the (re)insurer’s obligations to insureds?

Insureds can call on the third-party motor liability guarantee fund or the life guarantee fund in the event of insurer insolvency. In general, history shows that the insureds’ position is prejudiced.

Dispute resolution

Litigation

Are there any compulsory or preferred venues for insurance litigation in your jurisdiction?

The general provisions of the Code of Civil Procedure regulating the local jurisdiction apply to insurance disputes. Specific sections of the substantive courts are dedicated to disputes arising from road accidents, to which respective third-party motor liability claims are also submitted.

How are insurance disputes with a cross-border element handled in your jurisdiction?

The issue of jurisdiction in cross-border insurance disputes is regulated by the EU Brussels I Regulation (1215/2012), and particularly the provisions of Chapter II, Section 3 (Articles 10-16).

Should the cross-border dispute fall outside the scope of the Brussels I Regulation, the provisions of the Code of Civil Procedure apply in order to determine whether the Greek courts have geographic jurisdiction.

What issues are commonly the subject of insurance litigation?

The vast majority of insurance litigation relates to third-party motor liability disputes, where the object of the litigation is usually the extent of liability of the parties involved in an accident and the quantum of the damages.

Commercial disputes regarding fire and other cover are much less frequent and usually have a larger monetary value. Health insurance claims also form a part of insurance litigation in Greece. Finally, there are consumer law cases regarding the validity of policy terms.

What is the typical timeframe for insurance litigation?

The Code of Civil Procedure was drastically amended, with effect from 2016, with the aim of speeding up the civil litigation process. Although the results of this reform have not yet been seen, on average it should take one to two years to obtain a decision from the first-instance court. 

Arbitration

What regime governs the arbitrability of insurance disputes?

Insurance-related disputes may be subjected to arbitration in accordance with the generally applicable provisions of the Code of Civil Procedure, whereby policies must contain a solid arbitration clause.

Article 164 of Law 4364/2016 applies in disputes that may arise between a legal expenses insurer and the insured, in accordance with Article 203 of the EU Solvency II Directive (2009/138/EC). However, such arbitrations are also subject to the Code of Civil Procedure.