Government vice-president and high-ranking PASOK cadre Theodoros Pangalos on Tuesday expressed his dissatisfaction over the failed merger proposal extended by National Bank for rival Alpha Bank.

Addressing the annual regular general assembly of the Association of Insurance Companies of Greece, Pangalos said the insurance sector should not consider the failed merger bid in the banking sector, urging insurance companies to move forward with mergers in order to strengthen their financial status.

“You don’t have to maintain the traditional model of enterprises, you must try new forms of opening up the market and attracting capital towards boosting saving in the country,” he said.

Pangalos expressed his optimism over the outlook in the insurance sector, while he stressed that although he supported the three-party funding of the public pension system, insurance companies could have an increased role in covering peoples’ needs. He underlined the significance of promoting new composite products and the necessity of a strict supervision system.

G. Kotsalos, president of the association, emphasised that measures promoted by the government would not result to higher capital inflows in the sector and stressed that the political stance towards private insurance business could undermine enterprises’ capital adequacy ratios. The sector does not agree with a government effort to freeze life insurance premiums, he noted.

Kotsalos said total premium production was 5.25 million euros last year, while compensation paid to contract owners totaled 2.8 million euros and investments totaled 12.5 million euros. He stressed that total premiums reached 2.2 pct of the country’s Gross Domestic product, down from 8.0 pct of the European average, reflecting lack of tax incentives, low acceptance by the public and supervision problems in the past.