Civil responsibility insurance of Georgian car owners seems indispensable
06 September, 2010
Civil responsibility insurance of Georgian car owners seems indispensable

Imperfection of car accident insurance system hampers Georgian integration with the developed world. Absence of obligatory insurance of car-owners' responsibilities against the injured party in case of accidents lays ground to confusion on the international level and affects interests of both Georgian state and citizens as well as foreigners.

Imperfection of car accident insurance system hampers Georgian integration with the developed world. Absence of obligatory insurance of car-owners' responsibilities against the injured party in case of accidents lays ground to c

onfusion on the international level and affects interests of both Georgian state and citizens as well as foreigners.

If a car-owner who caused an accident in Georgia is non-solvent to reimburse the loss to the injured party he/she can go home without punishment and the compensation burden moves to either the state or the injured party itself. Uncertainty of situation leads to confusion and legal pursuits ultimately, the matter comes to blows quite often.

The point is Georgia has no obligatory insurance system of car-owners' responsibilities against the third [injured] party that insures reimbursement of losses to car-accident victims all over the world [except few underdeveloped countries] including the Commonwealth of Independent States (CIS). Only Georgia and Armenia out of the CIS space lack this system up to day.

Georgia had a law on Obligatory Civil Responsibility Insurance of Vehicle Owners that covered only-life-and-health related risks [not material loses] starting 1998 but it was not effective and laid ground to corruption deals and money extort in fact.

The premium fixed for the health-related injures was so insignificant that it was no relief to either the victim or the person responsible for the accident. For example the health-injure envisaged GEL 562 reimbursement, and the death case -GEL 3750. And government revoked the questioned law this year as a non-effective.

The insurance market pundits approved the governmental initiative to abolish a redundant law although say introduction of a new and effective one is essential.

Georgia has an obligation against EU in frames of European Neighborhood Policy (ENP) to adopt this civil responsibility insurance of car-owners.

On the other hand adoption of this system is substantial for Georgian insurance companies, citizens and the state alike as all of them are discomforted by the gap in insurance system.

People are unprotected against the car-accident risks and often there is nobody to cover hospital and material loss-related costs; state has to bear redundant responsibilities and unforeseen expenses to make up losses to injured sides instead of non-solvent car-owners; and insurance companies face difficulties when it is not clear who is responsible for damage-related payments after car-accidents. Car-owners who caused the accident think that once the car they have damaged was insured they are relieved of financial responsibilities and an insurance company is responsible for compensations.

"While insurance company is responsible only against its client who suffered of car-accident, but it has to raise the money paid for the car-accident-related expenses [via so called regress way of payment] from the car-owner who caused the accident and is frequently not insured. If it does not raise the money the tax inspection will assess it as a gift and will impose extra taxes on the insurance company, so they face double expenses," Devi Khechinashvili, President of Association of Georgian Insurance Companies (AGIC) elaborated.

Imperfection of the civil responsibility insurance hampers to service exchange and people turnover between Georgia and the outside world. It complicates situation when a foreigner is a part of car accident with Georgian citizen no matter in or outbound Georgia. However cases of car-accidents that involve foreign and Georgian citizens together more frequently happen in Georgia [rather than abroad] that confuses investors and tourists because the loss reimbursement system is too complicated in Georgia.

"There is a Green Card international insurance system that incorporates motor car insurance systems of  about 45 countries globe over and regulates the loss reimbursement-related  problems via insurance companies at the international level when a citizen of one of its member-countries is involved in a car-accident at the territory of another member-country," Khechinashvili explained to Georgian Journal. "Georgia would like to join this international vehicle insurance system, but we have to establish a proper insurance system first and foremost and legislation regulating this issue."

To set Georgia on a right track to settle the civil responsibility insurance system problem EU experts visited Georgia on August 23-25, 2010 and discussed the draft project of the questioned law worked out by AGIC in cooperation with German experts.

The draft is a framework at the moment and needs further detailed accomplishment. Number of key issues [including whether or not the car civil responsibility insurance will be obligatory or not, to insure a car or a driver, law administration and payment limits] are still open.  Khechinashvili cannot name exact timetables when the draft project will be transformed into the law, but believes that the law can be effective only if it is based on a compulsory insurance.

"This law will protect not only injured party but the culprit as well for lack of this law enables the injured party to make bankrupt the culprit of the car-accident via court. Georgian citizens unlike foreigners are not sophisticated in intricate details of the law covering car-accident cases as of yet, but they will acquire more in-depth knowledge soon and the law regulating civil responsibility insurance for car-accidents will be indispensable," Khechinashvili said.


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