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Insurance Agents always were and

still

remain the main pillar of market development!

In the Greek insurance market, insurance agents (as natural persons) were, are and will be (at least for the foreseeable future), the main channel of distribution of insurance products and the main channel of direct and two-way communication, development and strengthening of relations between companies and their customers!

This results both from the analysis and comparison of the data of the past decades, taking into account legislative, technological and climatic developments, as well as from the current sales data of the various available market’s sales networks, among which the leading role in sales is held by the insurance agents! Let's go through them.

Think about what the Greek insurance market and insurance intermediaries of 2000 (not to go further back!) might have to do with the insurance market and insurance agents today. In less than 24 years, everything we knew for decades and were taken for granted drastically changed!

Since the 1990s, the signs of positive change towards the growth of the Greek insurance market started to be obvious, therefore the foreign multinational companies showed their strong interest in the development of the Greek market, with a spectacular increase in their presence in it. This presence was based on the prospects of market development that foreign companies saw back then and never stopped to this day, as foreign companies continue to see prospects of further development of our market!

In the 2000s, the Greek insurance market reached the

peak of its size, profitability and production, with a production of 5,4 billion Euros in 2009!

But towards the end of the decade and particularly during the 2010s, everything started to change, but not towards the expected direction! Slowly at first and then at a rapid pace.

Top changes of this period that started in 2010 and reached almost to the present day, which had significant effects/consequences (negative and positive) on the market, were:

• Greece's appeal to the support mechanism of the International Monetary Fund (IMF), announced by the then Prime Minister of Greece Mr. George Papandreou in Kastelorizo, in April 2010.

• The subsequent inclusion of Greece into the memoranda, under the close monitoring of the Troika (IMF, EU and ECB) and the harsh austerity measures that followed which, in practice, lasted until 2018.

• The escalation of the occurrence of risks directly related to the effects of climate change, throughout the time period from back then until today.

• The assumption of supervision of the insurance market by the Bank of Greece and the Department of Private Insurance Supervision, in December 2010 and of course,

• The passing of laws 4364/2016 (Solvency II) and 4583/2018 (IDD), which changed the operational and investment structure of insurance companies, their relationships with and obligations to their customers and directly affected the structure of sales networks. Especially the structure of the sales networks was changed from a system of intermediaries directly connected to the insurance companies (agency system), to a system of free cooperation of independent intermediaries with the insurance companies, which resembles brokerage (without however being exactly a brokerage).

• The number of insurance companies decreased dramatically and today, according to the report of the Governor of the Bank of Greece Mr. Yannis Stournaras, 36 insurance companies are activating in the Greek private insurance market, which have their reserves in Greece and are supervised by the Bank of Greece. In 2023 they had a production of 5,26 billion Euros, again approaching the record of 2009. Consider the fact that in the 1980s we had more than 100 insurance companies in Greece, then we fell to 65 and now we have 36! In addition, there are more than 200 free service providing companies operating in Greece, which are agencies having their headquarters abroad and are not required to keep stocks in Greece. Their total production in 2023 amounted to 1,37 billion Euros. These companies cooperate almost exclusively with insurance agents. Respectively, the market's insurance intermediaries (agents and brokers) have decreased from more than 20.000 in the past decades, to around 7.000 in total today! In the past, there were more than 50.000 insurance intermediaries, without being sure of their exact number! The

production of insurance intermediaries (insurance agents and brokers) in 2023 far exceeded 50% of the total insurance production, leaving behind the cumulative production through banks, secondary activity insurers and aggregators!

• The new system of knowledge certification exams for insurance intermediaries, imposed by the Bank of Greece is significantly responsible for the reducing of the number of insurance intermediaries, given both the average success rate in the knowledge certification exams (which fluctuates around 50%) and the lack of systematic staffing and educational support activities, especially of the intermediaries brokers who are “independent” and not directly connected to the insurance agent network companies (intermediaries).

The above changes brought about a decrease in production and slowed down the development course of the insurance market, which once again began to take the first timid steps of development in 2018, but it was slowed down one more time by the onset of the coronavirus pandemic in 2020, which, however, signaled and consolidated the development of alternative sales networks, such as aggregators.

Apparently, the course of development is starting again now that, as it was officially announced a few days ago, the pandemic is finally over.

What else important happened during the period from 2000 until 2024?

Technology has been spectacularly developing, bringing new perspectives to sales and customer approach and service (aggregators, Artificial Intelligence, 5G's).

These new digital sales networks have been actively involved in selling insurance products, without however managing to increase the overall production pie of the market (which remains at around 2.5% of GDP) and definitely providing a lower level of information to their customers as far as insurance products and their functions are concerned, nevertheless, having the significant advantage of direct price comparison among insurance companies/providers of insurance products. Their total production does not exceed the production of the insurance agents’ networks, either connected to insurance companies or not.

Banks tried to get in a more aggressive way into the game of selling insurance products, because they no longer had the expected profits from their purely banking activities, and they partially succeeded, with the exception of the lack of know-how as far as insurance procedures and practices are concerned and especially insurance servicing of their customers, which has nothing to do with the equivalent banking services. The banks have not been able to increase the insurance pie either. Their total production does not exceed the production of the insurance agents’ network, either connected

to insurance companies or not.

Climate change and the ever-increasing risks of natural disasters associated with it. The necessity for all of us to be insured against natural disasters is now obvious and imperative! The increase of the average temperature, the rise of the sea level, the increase in drought periods and the subsequent fires, the increase in flooding phenomena, cannot but concern the entire population! If we add to this the seismic risks, which are a consequence of the natural movement of the earth's tectonic plates, the problem is maximized, especially in a country with high seismicity, such as Greece! Positive for the Greek market is the legislative handling of the State as far as the management of the problem of damages from natural disasters through private insurance is concerned, which is expected to improve the overall production results.

In Conclusion

According to the above data, the future of the insurance market and insurance agents in Greece is considered to be auspicious!

Let's not forget that the insurance penetration in the Greek market stands at a very low level (2,3%) compared to the rest of Europe, while in Germany the penetration is at 8,6%, in Italy at 7,1% and in Spain at 5,3%.

Only Bulgaria is placed lower than us, with a penetration of 2,1%. So, we still have a long way to go in order to continue our growing course and approach the European average! The necessity of private insurance for Greeks is constantly increasing, as a consequence of the ever-increasing risks faced by our modern society. In particular, the climatic risks and the risks related to the decrease in births, the increase of life expectancy and the effects that all the above have on the management of pension issues as well as issues of managing and maintaining of the assets of the Greek citizens (clients and prospective clients).

If we add to the above data the legislative interventions towards the direction of improving insurance incentives in some insurance sectors (such as automobiles and natural disasters), and taking into account the improvement of the image of the professional insurance intermediary, which is assisted by the tightening of the selection and evaluation process of those participating in the sales networks, all these can only have a positive outcome regarding the improving of the insurance agent's work results!

Who is Costas Papaioannou?

He is a certified instructor of insurance subjects, with many years of educational experience.

He has written the books “Investments and Insurance” (Spyrou Publications 2021), concerning the certifications of the Bank of Greece in Unit Linked products and “Insurance Agents” (Spyrou Publications 2022), concerning the mandatory knowledge and knowledge certifications of insurance intermedia-ries by the Bank Greece. He has also participated in the writing of the books published by the Greek Institute for Insurance Education and Hellenic Banking Institution. He is a columnist for Next Deal.

He collaborates, as a specialist scientist, for research and educational purposes, with the National and Kapodistrian University of Athens, while he teaches in the MBA Banking and Insurance Administration, as visiting professor, as well as in other postgraduate programs of the Athens University. In addition, he collaborates with and teaches at the Greek Institute for Insurance Education and the Hellenic Banking Institution (Hellenic Bank Association), as well as other educational institutions.

He holds a degree on economics and postgraduate studies in insurance. He has worked in senior management training positions in some of the largest insurance companies and banks, activating in the Greek market.

However, in order to continue to achieve and consolidate all the above, the insurance market and its operators, the insurance companies, as well as the operators and links of intermediaries, should focus on the systematic professional staffing and development of the insurance agents’ sales networks, as well as in their modern training, in order for the networks to be even more modernized and able to fully respond to their increased legislative obligations towards their customers, but also to the real increase in the needs of their customers for insurance! In addition, insurance agents should learn and develop their sales in ALL insurance sectors and not only (and by default) in the automobile, fire and life-health sectors!