Currently, Georgian insurance market unites 14 insurance companies and the market competition is very sharp. As a result, Georgian citizens are able to receive various insurance products and services.
At this stage, the January to September indicators have not been published yet, however, according to the January to June report, insurance sector has drawn 229 978 560.45 GEL insurance premium, up 13% compared to the same period of 2015.
According to Insurance Sector Supervision State Office, in January to June 2016, the market dynamics has not changed. According to the regulator, the reporting period’s 3 key insurance products are as follows: medical insurance – market ratio 49.30% (up from 48.07% year on year), property insurance – market ratio 15.71% (including agro insurance, down from 16.66% year on year) and automobile insurance – market ratio 14.01% (down from 15.15% year on year).
The sector’s net profits marked 12.4 million GEL, while the sector losses made up 2.3 million GEL in the same period of 2015.
The insurance market is regulated by Insurance Sector Supervision State Office through carrying out state policy, ensuring the market’s financial stability and solvency, promoting financial stability and adjusting the system to EU standards.
The Caucasus Business Week (CBW) has explored current tendencies on the insurance market.
IC Group insurance company
Over the past period the Georgian insurance market shows growth tendency. However, the ratio of insurance in all fields is very low and frequently this indicator does not exceed 6-10%, IC Group deputy director general Giorgi Shengelia said.
The market development depends on whether insurance products will become mandatory or not, Shengelia said.
«In this respect we welcome the supervision office’s very active engagement. It tries to develop and enlarge the market, but these issues should be regulated on legislative level. Consequently, the office communicates with the Government. I believe the year of 2017 will bring many positive tendencies and the insurance market will grow further. Currently, the market is increasing, but this volume does not suffice. Insurance culture has not reached sufficient level. Therefore, I think Georgian insurance market still remains in germ condition», Shengelia noted.
Unison insurance company
Georgian insurance market is stable and no special growth tendencies are recorded because of low level of insurance culture, Unison insurance company representatives said.
«There are more than 1 million registered vehicles in Georgia and only 200 000 ones have been insured. This signifies insurance culture remains at low level. Number of insured vehicles grow by only several hundreds year to year», Unison representatives said.
It is necessary to introduce mandatory insurance in Georgia to boost the market. We expect the new Parliament to introduce mandatory insurance. «This decision will enlarge the market and insurance companies will have more opportunities to sell more insurance products. We do not posses enough resources to spend money on popularization. We have chosen a specific segment and we work on that segment. However, we believe that insurance companies should spend certain funds to popularize insurance products. The state component should be also involved in this process», Unison representative said.
The past period has recorded upturn in premium revenues, but the quantity of insurance premium does not grow. Insurance products are not popular in the population, particularly, property insurance is very unpopular, Devi Khechinashvili, president for Insurance Association, said.
«A little growth is recorded in corporate insurance sector, but no growth is seen in individual cases. Small and medium business companies are very inactive in corporate insurance direction», Khechinashvili said.
It is necessary that the government act as a leader and introduce obligatory insurance component. Today health insurance direction is very active thanks to government efforts, Khechinashvili noted.
We expect the new parliament of 9th convocation to introduce mandatory insurance component for vehicle owners with the aim to increase insurance culture. Mandatory insurance is necessary to make the country more stable and foreseeable, Khechinashvili said.
The insurance market is growing and positive tendencies are seen in the past period, Insurance Institute president Giorgi Gigolashvili said. Several important legislative initiatives were proposed in 2016, including: according to amendments to Law on Insurance, insurance companies have moved to corporate management. Previously, an insurance company could act as a stock capital and a limited liability society. However, today we have a new legal organizational form – a joint stock company. Today, insurance companies have stakeholders and a general meeting of stakeholders, supervisory board, director. This system assist companies to improve management and recover insurance industry.
Moreover, according to amendments to the Law on Insurance, a new company that plans to enter the market and wants to obtain a license should submit a business plan to Insurance Supervision Office. This is a very good initiative, because last period insurance companies were set up without appropriate plans. As a result, all risks were not envisioned and this factor was making negative affect on both beneficiaries and insurance companies, Gigolashvili said.
The main thing is that the solvency margin was introduced in 2016. “This signifies that insurance companies must not keep less capital than the solvency margin. This is worldwide recognized mechanism to make insurance companies financially stable and capable of issuing financial resources to claimants. Previously, the solvency margin was abolished in Georgia”, Gigolashvili said.