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Georgian Insurance Market – Industry Evaluates 2017 Year

The Georgian insurance market registers 16 operators. The industry representatives assert that competition is sharp.

As a result, customers have access to various insurance products and services. At this stage, the 2017 financial indicators remain unknown. However, according to the official statistics of the Insurance State Office, in January-September insurance companies attracted 345.72 million GEL premium. In the same period paid insurance losses constituted 174.09 million GEL.

Attracted insurance premium due to insurance forms: medical (health) insurance – 161.42 million GEL; property insurance – 56.77 million GEL, land transport insurance (excluding railway transport) – 55.79 million GEL, life insurance – 16.95 million GEL, civil responsibility insurance – 15.34 million GEL.

Attracted insurance premium in medical insurance and market ratio due to companies: GPI Holding – 49.54 million GEL (31%), Imedi L – 41.05 million GEL (25%), PSP Insurance – 23.42 million GEL (15%), ARDI – 16.92 million GEL (10%), Irao – 9.82 million GEL (6%).

Insurance Premium attracted in Property Insurance Sector and Market Ratio due to companies: Aldagi – 24.59 million GEL (43%), GPI Holding 12.67 million GEL (22%), Unison – 5.95 million GEL (11%), Irao – 5.03 million GEL (9%), ARDI – 2.37 million GEL (4%);

Land transport insurance premium and market ratio due to companies: Aldagi – 21.36 million GEL (38%), GPI Holding – 11.98 million GEL (21%), TBC Insurance – 9.71 million GEL (17%), IRAO – 3.14 million GEL (6%), Alpha – 2.55 million GEL (5%).

Life insurance premium and market ratio due to companies: Aldagi – 6.39 million GEL (38%), TBC Insurance – 5.29 million GEL (31%), PSP Insurance – 2.72 million GEL (16%), Imedi L – 0.82 million GEL (5%), GPI Holding – 0.48 million GEL (3%).

Civil responsibility insurance premium and market ratio due to companies: Aldagi – 8.18 million GEL (53%), GPI Holding – 2.79 million GEL (18%), Unison – 2.23 million GEL (15%), Irao – 0.78 million GEL (5%), ARDI – 0.64 million GEL (4%).

The Caucasus Business Week (CBW) has inquired the current situation and tendencies on the insurance market in 2017, appraisals made by the private sector representatives, the field specialists and the existing expectations for the year of 2018.

Association of Insurance

Devi Khechinashvili, head of Insurance Association, says that the year of 2017 has not brought especially positive results for the insurance sector. The existing problems remain unresolved and they are still sharp, he said.

In 2017 the sector recorded a growth in indicators, but this is not the result of a growth in insurance coverage and development of insurance relations. In 2017, the number of insured beneficiaries do not differ from the number of people insured in previous years. This growth is expressed in inflation tendencies. «First of all, this is inflation of medical prices, government decisions, which have raised expenditures in private health insurance. Insurance market was insured a little faster, compared to economy. However, this growth does not suffice to say that our economy, society, insurance market, government is covered well in terms of insurance and key expenditures will be remunerated in case of risks», Khechinashvili said.

This year companies started publishing reports on quarter basis and this is a good practice to cast light on the market tendencies.

For many years Government of Georgia was rejecting an idea of introduction of an obligatory insurance instrument. This year we have a breakthrough in this direction. The first obligatory insurance bill has been submitted to the Parliament and the document has passed the second hearing. The documents refers to civil responsibility insurance for unregistered vehicles. «We appraise this document as the first stage», Khechinashvili said.

In 2017 Government was entitled to introduce mandatory insurance instruments in civil safety responsibility. For example, initially, mandatory insurance will be applied to faires and refueling stations. «The main thing is that this right was granted to Government to introduce mandatory insurance for civil safety responsibility», Khechinashvili noted.

As to the 2018 expectations, mandatory insurance mechanisms will be introduced in 2018, Khechinashvili said. This move will stimulate the insurance market. «I hope that in 2018 we will have progress in access to universal insurance services at both parliament level and Ministries. We hope the current problems with private insurance and universal health program will be completely eradicated», Khechinashvili noted.

Insurance Institute

Giorgi Gigolashvili, President of Insurance Institute, positively appraised the 2017 performance.

Georgian insurance market is stable and this is very convenient for the insurance market, he said. This year we had not shocks and no company has withdrawn from the market, Gigolashvili pointed out.

Number of beneficiaries has not increased in any direction, however, number of beneficiaries has increased in the direction of vehicle insurance and property insurance, Gigolashvili said.

Several conflagrations took place in 2017, he said. «In the case of Children World, no enterpriser had insured property, while in case with Eliava Fair, 17 entrepreneurs of 30 ones had insured their properties», Gigolashvili noted.

Changes  have taken place in universal health program in 2017. Namely, according to government decision taken in February 2017, universal health and private insurance packages were differentiated. «in that period the government noted that negotiations were underway on creating 25-27 GEL policies. I have not seen similar policy so far. I hope the working on this issue will be continued and similar policies will be created», Gigolashvili noted.

GPI Holding

GPI Holding insurance company states that in 2017 the company held the second employment forum and 365 persons were employed in addition. This is one of the unprecedented offers on labor market, he noted.

«This Forum has brought very positive reaction, because we have given a chance to hundreds of our citizens to make a career in our company. We had set minimum requirement for the position of sales specialist – we paid key attention to the desire and aspiration to take up a new profession, because we requested no specific experience or educational background. We had set no age restriction either. The program  included a paid job during the 6-month training period and we developed not only education program, but also support program – a combination of mentorship and coaching  to create the best environment for training and developing people with various age and experience. We are happy that many talented, motivated and respected persons of middle age dared and accepted our challenge and now these people are members of our team and they successfully continue working for our company», GPI Holding representatives noted.

We should also mention social campaign for insurance of business risks. This campaign was introduced after conflagration in Children World complex, they added.

Georgia is one of the undeveloped countries in terms of property risks market penetration and this is a key problem that frustrates a development of small and medium businesses.

«One unforeseen banal conflagration may leave companies in hopeless condition, as it happened in case with Children World. Several similar facts took place throughout the 2017. This factor has preconditioned  that in February 2017 we started a large-scale social campaign with focus on spreading information and demonstrating insurance service benefits  entrepreneurs. As part of the campaign, GPI Holding was financing business risks insurance premium with 50% for two months. At the same time, we developed a policy created specially for this segment, which called for insurance of buildings, machineries and reserve situations. This instrument enables to restore the damaged property and unreceived property and bank interest rates.

The compensation limit was determined by 50 000 GEL, while monthly premium totaled 15 GEL as part of the campaign.

It should be noted that during the campaign we reached many entrepreneurs and their application rose by 300%. As a result of this activity, after conflagration at Eliava Fair, we saw that 80% of enterprises operating in the burnt space had insurance policies and insurance sector cares for compensation of their losses. However, the statistics shows that property insurance indicator is very low and naturally, this is not sufficient that this segment have financial guarantees in similar unforeseen situations», GPI Holding representatives said.

In 20127 GPI Holding added new products.

Cancer risks insurance is the first and most remarkable product. This was a key novelty on the market.

«Onco Care policy enables to buy the limit at affordable price and it is compensated during the cancer diagnosis. We know that huge expenditures are required to treat oncology disease and therefore, people visit doctors too late or they lack for money to finance the full course of treatment. In this case we have fatal outcomes, while early  diagnosis grows chances for healing the cancer and in similar cases people should be protected in terms of finances.

To say differently, this is a certain relief in similar extreme situations. Key advantage of this product is that the money is issued in the form of compensation  and the beneficiary is free to manage it. This component makes this policy different from health insurance, when money is compensated on the ground of documents that are necessary for treatment. Another moment is that preliminary examination is not carried out for the beneficiary and  oncology disease existing before insurance is an only exception. Simple procedures are required  to sign the policy and in case of insurance of adult, the same limit automatically insures adolescent children of the beneficiary.

High limits should be also mentioned – tariff is attached to the age of the beneficiary. For example, annual payment for the 50 000 GEL insurance package for 35-year old person is 50 GEL. We aim to popularize this product, especially amid the current social environment. Moreover, we transfer 5 GEL from each sold policy to HERA foundation to expand support to the people who have to defeat this disease», GPI Holding representatives noted.

Changes to universal health programs represent another important novelty for the company and insurance market, in general. Naturally, these changes have affected both insurance companies and their strategies and each citizen, they noted.

GPI Holding has set a limit for participation in the universal program due to revenues. This signifies the higher revenues of this or that able-bodied person, the less benefits he/she receives from the state, while persons with more than 40 000 GEL incomes a year cannot receive the state universal program benefits.

«On the one hand, this creates opportunities for insurance companies, however, on the other hand, restricts access of people to private insurance system, because holding or non-holding of insurance remains one of the separation lines. Based on this reality, we have developed a model for individual and corporate insurance that maximally reflects this reality  and we have managed to considerably increase our portfolio – according to the January-September indicators, this figure totaled 45%. It is worth noting that the above-mentioned restrictions forced a major part of companies to cease offering individual health insurance products. However, we have followed other strategy and offered several novelties to the market. At the beginning of 2017 we introduced a new product – GPI exclusive that offers a radically different and market-adapted insurance product. The product similar to corporate insurance may be bought by our consumers in individual regime. This product is very popular. Advantage of GPI exclusive is that it includes higher limits for treatment and covers almost all expenditures without exceptions. Free choice of clinics and opportunity for enjoying our distance services. Insurance price depends on the age of beneficiary and package and monthly fee is about 50 GEL», GPI Holding representatives said.

As to the 2018 expectations, GPI Holding says that, according to the 2017 public opinion poll, GPI Holding is perceived as the provider of best insurance services and this is key priority in the company.

«Naturally, we have achieved this result thanks to simple and comfortable compensation process. In 2016 a major part of our consumers started using our online platform – mygpi.ge for compensation and other services. In 2017 this was one of the evident improvements for our clients – compensation by mobile application or website is carried out within 1 workday and this is a genuinely unprecedented fact on insurance market.

Improvement of services and simplification of insurance and expansion of access – this is our objective for 2018. Introduction of digital technologies is one of the important factors for our digitalization strategy and this is not only our local strategy line, but Vienna Insurance Group also determines it as a priority direction. In this respect out consumers will learn about many innovations in 2018, GPI Holding representatives said.

Aldagi Insurance Company

Giorgi Baratashvili, Aldagi insurance company director general, explains that the year of 2017 should be positively appraised for the company.

«There were several big losses, I mean conflagrations. Previously one big conflagration was recorded every 3 years. Regretfully, now we see that at least one big conflagration takes place every year. This signifies conflagration insurance has risen in the country», Baratashvili noted and explained that in 2017 the company expects at least 15% upturn. This is not a big figure, because unemployed market is quite extensive. Small and medium business is especially passive, he noted.

The company expects that mandatory insurance instrument will be introduced in 2018 and this component will ensure the sector development, Baratashvili noted.

The sector development is unimaginable without obligatory insurance mechanism. «We provide active job with the Government. This first step implies a mandatory insurance of vehicles moving with foreign signs. This is a key event we expect to take place in 2018. This mechanism will expand the insurance market. Without health insurance, according to the 2016 indicators, total insurance market is worth 200 million GEL. This is a very small figure, while there are 16 insurance companies on the market», Baratashvili noted.

Insurance market cannot be developed without mandatory instruments. International experience suggests that insurance component is a key instrument for risks management and Europe realized this factor 50 years ago, he said.

Government of Georgia is taking certain steps for introduction of mandatory insurance, Baratashvili pointed out.

«Insurance culture grows step by step. In 2016 property risks insurance market rose by about 10% and this is a very small figure for the developing market», Baratashvili said.