Original Sins of Insurance systems: The case of the Greek Occupational Risk Insurance Scheme, IKA-ETAM
Keywords:
Occupational risk insurance, prevalence approach, incident approachAbstract
This paper aims to estimate the cost of pensions, compensations and foregone contributions due to occupational accidents for the main Greek social security institution IKA-ETAM. Through this process, conclusions transferable to other occupational risk insurance systems are drawn. Both prevalence and incidence approach are applied on analytical data for active and new occupational accident pensions and compensations of IKA-ETAM for 2007. Cost is estimated as the difference of all costs and benefits with and without the accident. Prevalence approach leads to an estimate of €148,539,548.40 against an estimate of €77,707,206.98 with incidence approach. In both approaches, cost of temporary disability is estimated at €18,464,021.61 and foregone contributions (opportunity cost) account for 27% of total cost. Although wages raised, contribution and compensation rates remained stable and accidents decreased for IKA-ETAM contribution payers during last decades, the viability of the system is threatened. The reasons identified are a) the increase of the average time off-work per accident and b) the backload, due to the large number of accidents and pensions in the past.
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