Insurance savings plans post growth
Offering guaranteed yields of 1.51.7 percent on average, insurance savings products are now a major rival to time deposits, whose interest does not exceed 0.7 percent on an annual basis, while that rate seems set to drop further.
The aim of local banks is to bring time deposit interest rates down to around 0.5 percent within 2017, proceeding to further cuts once the bailout review is completed and the deposit outflow of the first two months of the year has stopped. The very low interest renders real returns negative once the inflation rate – that has just reappeared in Greece – is factored in.
According to data from the Hellenic Association of Insurance Companies (EAEE), sales of insurance savings plans increased at an annual rate of 19.2 percent last year, and the turnover of the life insurance sector amounted to 1.4 billion euros in Greece.
By contrast, investment insurance products declined by 16.8 percent last year, with this portfolio amounting to 271.4 million euros. The imposition of the capital controls hampered these investments mainly in securities abroad, due to the monthly 1,000euro limit on money exports.