President of Insurance Association Assessing 2014

Devi Khechinashvili, President of Insurance Association, asses the past year for the industry and talks about the favorable events that would transform the sector in Georgia, such as obligatory insurance policy. As of today, corporate insurance is the only driving force in this sphere. Talks of motor third party liability (MLTP) insurance have been thwarted and not much change is yet expected n 2015. 

- Assessing development of insurance sphere in 2014:

This past year was a year in which the insurance industry almost entirely lost its main driving force for acquiring bonuses and the momentum for development. What I have in mind are the state funded insurance programs. Precisely these programs contributed to popularizing insurance and raising social awareness around it. This matters especially since there is no “classic” driving force of the insurance industry in Georgia – obligatory insurance. There are numerous such insurances in developed countries. Obligatory insurance in these countries is the main tool of risk management. For instance, Great Britain passed a law that made flood insurance obligatory. Ever since that law was adopted every real estate owner in the UK makes his or her compensation toward restoring flood damage made in the country. Yet, in Georgia, such simple matters as protecting our citizens from the major harm inflicted by intensive state of auto-transportation are not settled. We do not have a tool that would ensure reimbursements of individuals who are victims of frequent car accidents. This is unfortunate, since such mechanisms exist in every sound country.

As of today, corporate insurance is still the driving force of Georgia’s insurance industry. Insurance companies are losing a great share of products that potentially could exist on the market. This causes degradation inside the companies. They are not exercising the skills that are essential for the industry’s successful development.

However, significant developments can be observed within the corporate insurance itself – the field is gaining new directions. For instance, a huge step forward is the development of the government-subsidized agro insurance in Georgia. Development of this sphere is very important for the country. It is one of the bigger stimulants for agricultural production in Georgia.

- What is planned in the insurance sector in 2015?

There is no evident plan for the year 2015 to be seen yet. Unfortunately, there is no significant progress expected in the development of obligatory insurance this upcoming year either. It looks like the government is not planning to address this mechanism quiet yet.

We are looking forward to seeing developments in the agro insurance sector. I hope that we will use 2015 efficiently in order to better the regulatory side of this sphere. A revision of the existing insurance law should take place. In 2015 we also await solvency system to be incorporated in the Georgian insurance market.

- What would be your prognosis for 2015?

Whether or not there is going to be tangible development toward the implementation of obligatory insurance in 2015 highly depends on legislative and regulatory reforms.

A very important issue for Georgia is the third phase of the health insurance reform, its specific nature. How is the public health insurance going to develop? This is a question that is still open. It is yet unknown if such insurance will be available for every citizen. It is also unknown what range of services would state health insurance cover – whether or not a large portion of services would still be up to the private sector. All of these issues are extremely important for the development of the state health insurance policy.

"Caucasian Business Week"

05.01.2015
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