About Insurance

Basic Insurance Terminology

Insurance

A relationship established for the protection of private and property interests of natural and legal persons through monetary funds created by the insurance payments (insurance premium) and other sources permitted by the legislation upon occurrence of certain circumstances (insured events).

Insurer *

Legal entity in organizational-legal form of joint stock company, which is established to carry out insurance activities and which has obtained relevant type of insurance activity license in accordance with rules defined under this law.

Policyholder

A natural or legal entity, that has concluded an insurance agreement with an insurer.

Insured

A natural or legal entity insured. A policyholder may also be the insured, unless otherwise defined under insurance agreement.

Beneficiary

A natural or legal entity, that receives insurance in accordance with insurance agreement or receives insurance reimbursement legislation on compulsory insurance.

Insurance agent

A natural or legal entity, that acts based on the task of and on behalf of the insurer within the scope of authority granted by the insurer.

Insurance broker

A individual entrepreneur or legal entity established under Georgian legislation, which is register by a legal entity of public law- the Insurance State Supervision Service of Georgia (hereinafter referred to as Service), and independently carries out brokerage activity in the field of insurance as a type of its entrepreneurial activity.

Subject matter insured

Proprietary or personal interest insured under the Policy.

Insurance Application Form

An application is a form providing the insurer with certain information necessary to underwrite a given risk.

Insurance policy

Signed document issued by the insurer- certificate of insurance agreement.

Term Insurance

Life insurance coverage for a specified period, typically without cash value.

Insurance premium

Amount payable by a Policyholder as a cost of insurance cover. Amount of premium and terms of payment are stipulated in the Insurance Policy.

Sum Insured

The upper limit, or cap, specified in the Insurance Policy, which is reflected in the insurance policy.

Insurance accident

An event upon occurrence of which payment of insurance policy is provided in accordance with insurance agreement.

Loss

The basis for a claim (a request made by the insured for payment of benefits provided by the policy) under an insurance policy.

Insurance reimbursement

Amount payable by the Insurer to the Policyholder/Insured/Beneficiary to reimburse the loss caused by the Insured Event.

Deductible

The amount the insured must pay out-of-pocket before the insurer pays a claim.

Coverage Territory

An insurance policy's coverage territory is the geographic location where its benefits apply.

* List of the insurers

Types of Insurance

  • Life
  • Travel
  • Personal Accident
  • Medical (Health)
  • Road Transport Means (Casco)
  • Motor Third Party Liability
  • Railway Transport Means
  • Aviation Transport Means (Hull)
  • Aviation Third Party Liability
  • Marine Transport Means (Hull)
  • Marine Third Party Liability
  • Cargo
  • Property
  • Financial Risks
  • Suretyships
  • Credit
  • Third Party Liability
  • Legal Expenses

Forms of Insurance

Insurance is carried out in two forms: Voluntary Insurance and Compulsory Insurance.

Voluntary insurance is implemented on the basis of a contract concluded between the Insurer and the Policyholder.

The types, conditions, and procedures of voluntary insurance are determined by the contract signed between the Insurer and the Policyholder.

Compulsory Insurance is a form of insurance in which the object of insurance, its types, and the procedures for implementation are defined by the relevant law on compulsory insurance.

In the case of compulsory insurance, the Insurer is obliged to conclude a contract with the Policyholder under the conditions defined by law. The Insurer has the right to offer the Policyholder terms that are more favorable than those established by law.

Facts from the History of Insurance

Lloyd’s Coffee House
Insurance began in the 1650s at a coffee house near the Thames, where more than 370 years ago a few bold individuals gathered and decided to insure their ships and voyages. Lloyd’s Coffee House soon became the prototype of the insurance market, and its owner, Edward Lloyd, is regarded as the founder of insurance companies.
The First Car Insurance
The first car insurance policy was sold in the United States. Since cars were a rarity in 1898, the idea of car insurance at the time seemed extremely exotic. The first person to purchase such a policy was Mr. Martin, who insured his car for 500 USD and paid a premium of 12 dollars and 25 cents.
The First Insurance Contract
The first insurance contract covered maritime voyages and was concluded in 1347 in Genoa.
Unusual Insurance Policies
Insurance financially protects us from unexpected events that could cause significant financial loss. However, in the modern world, there are also some “quite unusual” insurance policies. For example, there are policies that protect against alien abduction, death from excessive laughter at the cinema, or even changing one’s mind about getting married.
Insurance Keeps Pace with Every Innovation
In 1848, the first insurance policy for railway passengers was issued
In 1851, for stagecoach insurance
In 1911, the first aviation insurance policy
In 1965, an insurance policy for a space satellite was created
Since 1990, the sale of cyber insurance policies has begun.
The drive toward innovation in insurance continues today. InsurTech compels the industry to think about the future, along with the risks and opportunities that come with it. The first person to purchase car insurance was Mr. Martin, who insured his car for 500 USD and paid a premium of 12 dollars and 25 cents.
The Most Popular Type of Insurance
The most popular type of insurance in the world is life insurance. The spread of life insurance began in the 16th and 17th centuries in England, France, and the Netherlands.
The first known life insurance policy was issued in England in 1583. Since then, millions of life insurance policies have been sold worldwide every year.
Expensive Life
According to the Guinness World Records, in 2014 the most expensive life insurance policy was purchased by an anonymous single billionaire living in Silicon Valley. He bought the policy for 201 million US dollars. The insurance company did not disclose his name, stating only that in the event of the billionaire’s death, the insurer would pay out 201 million USD.
Insurance of Body Parts
Silent film star Ben Turpin started the trend of insuring body parts in 1920. He purchased a policy in London worth 25,000 USD to cover the risk that his trademark crossed eyes might one day straighten.
Travel Insurance
While traveling in search of adventure, many unusual incidents may occur. Such cases have been reimbursed under travel insurance, for example: injuries from a cobra bite during a trip to South Africa; a lost wedding ring while diving; the cost of a camera damaged by high voltage while charging in a hotel in Rome; expenses caused by an allergic reaction after getting a tattoo in Canada; and even compensation for various belongings “stolen” by monkeys in Indonesia, etc.
The Largest Insurance Loss
As a result of the hurricanes Katrina, Rita, and Wilma in 2005, a record total insurance loss was recorded, amounting to 130 billion USD.
The Sunken Ship
In 1912, most of the passengers aboard the Titanic were covered by life and accident insurance. The insurance company paid out for one of the largest losses at that time - 1.1 million USD.
Rome
From 600 BC, associations and guilds existed in Rome, initially emerging as religious groups. For example, in so-called burial clubs, members paid the necessary funds for funerals, and this is where the first beginnings of life insurance originated.
The 1347 Maritime Agreement
The fundamental development of insurance began as Europeans started exploring new lands. The age of geographic discoveries, along with advancements in shipbuilding and international trade, brought new risks. To protect themselves, shipowners and merchants agreed during trading expeditions that in the event of damage or loss of any property, all parties to the agreement would share the loss. Such a maritime agreement that has survived to this day dates back to 1347.
Babylon
Examples of mutual insurance and mutual aid can also be found in Babylon (1760 BC), where the oldest known forms of insurance were represented by maritime transport contracts known as Bottomry and Respondentia. In these contracts, the shipowner would take a loan, pledging not only the ship or other valuables as collateral but also the life of themselves and their family members. During the reign of King Hammurabi (2nd millennium BC), when Babylon became a major trading center with many caravan routes passing through it, the practice of such contracts was legalized under the Code of Hammurabi.
London
In the field of property insurance, the major impetus came from the Great Fire of London in 1666, during which 13,200 buildings in the city center were destroyed. After this event, newly established associations began offering fire insurance for buildings. It is also believed that the idea of life insurance originated in Great Britain. In 1762, the company Equitable Life Assurance Society was founded, which continues to operate to this day.

Insurance Day – 2 May

Insurance Day is celebrated in Georgia on May 2.  This tradition was established on May 2, 2022, on the initiative of the National Bank of Georgia, the State Insurance Supervision Service, and its financial education portal www.finedu.gov.ge with the support of the Georgian Insurance Association and the involvement of representatives from the insurance sector.  The idea of establishing Insurance Day arose during discussions on projects to be implemented within the framework of the National Strategy for Financial Education and it aims to raise public awareness about insurance.  It is worth noting that in Georgia, the Law on Insurance was first signed on May 2, 1997.