The cost of private health insurance, which depends heavily on structural peculiarities in Greece, further pressures household income. A recent Parapolitika publication highlighted, among other things, the high cost of insurance policies, revealing the significant share of responsibility in the role of insurance brokers and their commissions.
The Union of Insurance Intermediaries of Greece (EADE) responded with a letter to the journalist and the publication, refuting arguments about excessive burden from commissions. As noted in their letter, insurance broker commissions range from 8% to 18% of net premiums and have not increased in the last 15 years, while their calculation concerns the net premium and not the total amount paid by the insured. Furthermore, they emphasize that the sector is supervised by the Bank of Greece, operates transparently, and fees are set by the insurance companies themselves, without negotiating margin from the broker’s side.
The EADE Letter
EADE poses the question: “Is it fair to target only the broker, when the health ecosystem includes fewer than 10 active insurers and 2-3 dominant healthcare provider groups?” As noted in EADE’s letter, the VAT increase on health services, lack of transparency in provider charges, and the 15% tax on premiums are also significant cost factors, and therefore the discussion about health insurance costs cannot be one-dimensional.
Click HERE to read the complete EADE letter.
At the same time, the Competition Commission’s final report provides objective data on the broader landscape. The report characterizes the health market concentration level as moderate, with acquisitions continuing but without significant impact on competition. However, it identifies significant regulatory asymmetries in the licensing and expansion framework of private clinics, creating multi-speed clinics and potential distortions.
Who ultimately benefits from the system?
Of particular interest is the section of the report concerning insurance case management companies. These are businesses that undertake, on behalf of insurance companies, the control and management of claims, playing a gatekeeper role in the insured’s access to service provision. Despite increasing concentration in this sector, no abuse of dominant position or exclusivities are identified. However, the lack of supervision of these companies is noted, as they fall under neither the Bank of Greece nor any other regulatory authority.
To the question of who ultimately benefits from the system, the reality is complex. The balance sheets of large intermediary companies, such as Mega Brokers, show higher profitability compared to hospitals and some insurance companies. However, EADE reminds us that 90% of brokers have annual income below €35,000, with 50% below €20,000, a fact that de-escalates generalizations.
The Competition Commission Report
Specifically, the report reaches the following important conclusions:
The concentration level in the market is characterized as moderate, while acquisitions that have taken place by foreign investment capital in recent years have not dramatically changed the concentration level from 2019 to 2022. Mobility in acquisitions of primary and secondary healthcare providers continues to be observed in insurance company relationships.
The legislative framework does not create obstacles to bed increases, but the conditions for bed increases can make it difficult or prevent a clinic from proceeding with bed increases. Regulatory asymmetries exist due to the parallel application of three different licensing, operation, and expansion regimes for private clinics, which appear to cause competition distortions, as different specifications are set regarding staff, equipment, spaces, and minimum number of beds, resulting in maintaining three-speed clinics.
The role of health insurance administrative service companies is highlighted, which are primarily tasked with control (gatekeeping) and management of insurance cases-claims, acting on behalf of insurance companies. Furthermore, these companies often constitute the intermediary in negotiations between insurance companies (especially medium-small sized ones) with private clinics. Their number is small and in two of them the greatest concentration of management services is observed, but no exclusivities were found in their contracts with insurers to whom they provide similar services, having access to commercially sensitive information relating to insurers’ relationships with hospital providers. However, the existence of agreements between insurance companies for joint use of management company services does not emerge. It is noted that these companies are not supervised by the Bank of Greece or other regulatory authority.
The above conclusions put things in perspective and obviously refute claims heard for so long about healthcare provider cartels or that there are entry barriers to creating new clinics/hospitals. Obviously, there is strict legislation that must be followed when projects concern the sensitive area of health.
Insurance Broker: Sector profitability increase
On the other hand, another significant parameter of insurance cost is gradually emerging, concerning the cost of Insurance Brokers. The Broker’s cost (however calculated) remains particularly high and certainly burdens the final consumer as it is calculated as a percentage of the premium paid.
However, since percentages differ as the Broker’s fee amount is determined by the insurance company but obviously relates to the broker’s annual premium production, the approach to how much these fees burden premiums can only be done through extrapolation from Intermediary Company balance sheets. Thus, studying the latest published balance sheets of intermediary companies, one observes that for example Mega Brokers (interests of current Hellenic Insurance Association president Mr. Hatzitheodiou) for 2023 showed turnover of approximately €15 million and pre-tax profits above €2 million, while for 2024 use in a recent company event (as the 2024 balance sheet has not yet been published) a 25% production increase was announced with €18.3 million turnover and obviously corresponding profitability increase.
At the same time, based on official published hospital balance sheets, the vast majority of clinics have much lower turnover and naturally profitability. It is particularly striking that the intermediary Brokerage company ultimately makes more profits than the hospital (provider of the service that shoulders investment costs, personnel and operating costs for medical act execution as well as legal responsibility towards the patient) but also than the insurance company (as all complain that health makes them lose money).
Regardless of claims that Brokers offer significant service that is legally provided, the moral question raised is whether ultimately the insurance Brokerage sector is the only beneficiary of the current operating method of the insurance market and health sector, since without any substantial business risk, sector companies secure high dividends for their shareholders on a stable basis.
