A new legislative proposal on housing and state aid introduces an unexpected twist for business insurance in Greece—creating what experts describe as a policy paradox. Under the draft law, businesses that voluntarily insure their premises will now receive state housing assistance only for the portion of damage not covered by their private insurer. In contrast, a similarly affected but uninsured business faces no such restriction—and may qualify for full public support based on the total assessed damage.
A Shift in Public Cost Sharing
The change is embedded in an article of the bill recently submitted to Parliament. It applies specifically to privately owned commercial buildings with active insurance policies at the time of a natural disaster—such as floods, earthquakes, or fires.
Under the new rule, if a business property sustains damage, the insurer’s liability is calculated first. Only the uncovered balance—what remains after the insurance payout—is eligible for consideration under the state housing aid scheme. This marks a departure from current practice, where no such offset was applied to commercial buildings in housing-related support calculations.
For example, if a business incurs €100,000 in eligible damage and its insurer pays €60,000, the state will now base its housing assistance only on the remaining €40,000—not the full amount. Standard aid percentages, thresholds, and caps will then apply solely to that uncovered sum. While the business still receives both the insurance payout and the state aid, the overall fiscal contribution from the public budget is reduced.
The Paradox Deepens
The policy raises a fundamental question: Why would a small- or medium-sized enterprise choose voluntary insurance—especially against high-risk perils—if doing so effectively diminishes the scale of state support available in the aftermath of a disaster?
Consider two otherwise identical firms, each with €300,000 in annual gross revenue and similarly valued commercial properties. Neither falls under the mandatory insurance requirement (which applies only to firms with revenues over €500,000). One opts for voluntary coverage against floods, fire, and earthquakes; the other decides against it, citing cost concerns. If both suffer identical flood damage, the insured firm will see its state aid capped at the uncovered portion—while the uninsured firm could potentially receive aid calculated on the full damage amount.
This structural disincentive has drawn attention from business associations and fiscal analysts alike, who warn it may undermine broader risk-resilience goals—particularly for SMEs operating in disaster-prone regions.