An interview with the head of the Georgian Insurance Association Devi Khechinashvili
What experience did the country gain as a result of thenatural disaster in Tbilisi, if we look at the issue from the perspective of the insurance industry?
Today, the government and experts say that the total damage from the flood totals GEL 100 million, some say about 150 million, while the insured losses amounted to only GEL 4 5 million. Naturally, this is an alarming situation, imagine what would happen in the event of the earthquake, when the losses amount to billions? Therefore, international experience shows that the government should develop special programs that will minimize the impact of natural disasters. This is particularly true for damage compensation , since it has a direct blow on GDP, and eventually affects all citizens.
The effectiveness of the insurance system is not very high in the countries such as the Netherlands where natural disasters are regular, because floods occur there almost every day. In this situation, the role of the government comes to the fore. However, in Georgia natural disasters occur rarely, but have severe consequences, respectively, our insurance system should respond to natural disasters. We have to very professionally explore all possible risk of earthquakes, landslides, avalanches, floods, fires, and create a system that will be based on the insurance instruments.
Such a system will change the situation where the bulk of the compensation is paid not by insurance companies, but at the expense of the state and charity. Of course, everything cannot be insured in any country in the world, but in the developed countries uninsured damages account only 10-15% of compensations while in Georgia- 97%.
What should the government and the private sector do to increase the insurance culture in Georgia?
A paid amount is the best advertising of the insurance business , which in any case leads to an increase of insurance culture in all countries. As many citizens as possible should have insurance. To achieve this, we must introduce a compulsory insurance. We may not like it, but in any civilized country it is the basis of risk management. Cars, gas stations, chemical plants, professional liability, for example, a doctor or a lawyer- that is all where there is a serious risk falls under the mandatory insurance, which increases the level of social and economic stability and predictability.
Georgia is a unique country, where no one type of compulsory insurance is enacted, that is, the government is not using this tool of risk management. This barrier must be overcome, and we must not be afraid of it. It is clear that Georgia is a poor country, and therefore it is necessary to clearly define priorities for compulsory insurance, but the state should reduce the risks from various natural disasters. Therefore, there are proven mechanisms that should be used only with proper prioritization based on the economic situation in the country.