Georgian insurance sector faces new reality
15 May, 2014
Georgian insurance sector faces new reality
The Georgian insurance sector faces a new reality which holds out the prospect of reduced incomes. But the future also holds an increased stability and higher profit if insurance companies maintain a good management, sector pundits say. The Georgian insurance industry is at a turning point. The state supported a four-year medical insurance program for socially vulnerable people which comes to an end this year and the private sector should go ahead with only the sale of corporate products. In
fact, this social medical insurance was quite a controversial product which led companies to high profits. Profits soured around 60% during its early phase, but eventually ended with huge losses fluctuating between 90-100%. The insurance scheme consisted of two major parts: one included medical insurance of pensioners, students and children less than five years old, and another included pedagogues, people with restricted abilities, and people below the poverty level. Both groups are estimated as at a high risk for health insurance products since the major part of the demand comes on them. Initially, companies were reluctant to participate in the tender, which was announced in 2010 by the previous authorities, to deliver healthcare insurance services to these risk groups.
The reason for this was that the authorities offered packages at an unreasonable pricing which was much below the market price for companies. However, after some blackmailing on the part of the state companies they agreed to it. Nevertheless, Giorgi Gigolashvili, Head of the Georgian Insurance Institute, believes that some agreed willingly to this because of the anticipated high profits they would receive out of guaranteed state funding while the demand was expected to be low because of a low awareness level of the targeted beneficiary groups.
As awareness increased, the demand went up and companies witnessed losses. Some went bankrupt and some merged with other companies. On the other hand, international research showed that they failed to deliver quality services. After the power shift in the fall of 2012, the new authorities decided to take responsibility for the medical insurance of socially vulnerable groups when the four-year program expired. In February 2013, the government started with an overall health insurance which only includes basic medical service to those who were not covered by either the state or a corporate insurance company. When, this year, the medical insurance of socially vulnerable people expires the overall state insurance will gradually take over by end of the year. Starting from April 1 it already took over the insurance of pedagogues, of persons with disabilities and of people living below the poverty level. The remaining groups will tentatively be covered starting from September. Commensurately, the private sector loses its high premiums averaging GEL 250 million paid by the state every year for the healthcare of socially vulnerable people. On the other hand, they will be free of the high losses they suffered due to the high demand of these state programs. The insurance industry earned roughly GEL 233 million in premiums over the past year through the state health insurance programs while they paid out around GEL 226 million in compensations. Lasha Nikoladze, Head of the State Insurance Supervisory Agency, believes the removal of risk target groups creates a new development opportunity for the private sector.
“According to the insurance companies, participation in the state insurance programs was financially burdensome. Accordingly, the volume of premiums for companies will also shrink but it will increase their profitability and stability,” Nikoladze said in an interview with Georgian Journal. “It is better to be a small and healthy company than a big one encumbered with liabilities.”
According to him, over the last 17-18 years the insurance industry could only insure half a million people out of the 4.5 million Georgians, while the recently launched overall state insurance covered 2.2 million people only in the past year. This is a potential market for the private sector too since the already performed basic packages give an impetus for the development of VIP packages.
“These 2.2 million people who could not afford medical insurance before are now potential clients for private companies if they can offer services beyond the basic needs. They can add money on basic packages and receive the more expensive service which they could not afford before,” Nikoladze elaborates. As a result, Gigolashvili expects healthier competition between companies on the market and foresees cheaper prices for consumers.
Print
Other Stories
Georgia Acquires Up to 400,000 COVID-19 Tests and 50 Ventilators With World Bank Support
With the World Bank's $80 million Emergency COVID-19 Response project financial support and mediation, the government of Georgia was able to procure 147 000 Rapid COVID-19 Antibody and Antigen Test Kits and 250 000 PCR Test, that will triple Georgia's testing capacity to 3000 samples per day by mid-July, - reports World Bank.
Georgian business associations establish Georgian Tourism Industry Alliance
Business associations representing various sector of the hospitality industry in Georgia agreed to establish Georgian Tourism Industry Alliance (GTIA).
IMF approves $200 million for Georgia
The Executive Board of the International Monetary Fund has approved US$200 million financing to Georgia to address the effects of the COVID19 pandemic.
Georgia will be one of the first to open tourist corridors, Economy minister vows
Georgia’s Minister of Economy and Sustainable Development Natia Turnava pledged that Georgia would be one of the first countries to open safe tourist corridors with other countries.
Georgia’s GDP may contract 4%, the worst in the region amid pandemic
International Monetary Fund forecasts a 4% contraction of Georgia’s economy, which very much depends on tourism and money transfers.
Georgian retailers fight for survival as coronavirus pandemic continues
Pandemic has affected everyone worldwide, but one of the most vulnerable are retailers, those who depend on consumers and their spending.
Georgia remains the fifth in terms of budget transparency
According to the 2019 Open Budget Survey (OBS), conducted by the International Budget Partnership (IBP), Georgia got 81 points out of 100 in state budget transparency, the Transparency International Georgia said on Wednesday.
Georgia to receive €1.16 million for agriculture development
Within the GRETA project, the EU, Sweden and Austria launched the Local Development Initiative (LDI), to create great economic opportunities in the organic agriculture sector for farmers, farmer groups, cooperatives, processing units as well as other actors along various organic value chains.
Products rotten amid nationwide lockdown in Georgia
Food chain security is becoming more and more important as lockdown stays in place and farmers cannot transport their products from one place to another.
Georgian government to spend GEL 3.5 billion within crisis management plan
Georgian government has introduced a crisis management plan that consists of different stages. GEL 3.5 billion will be spent to cushion economy but this amount does not cover the post-crisis recovery period.
Georgia to receive €183 million from EU to fight Coronavirus
Due to the economic crisis caused by the pandemic of the coronavirus disease COVID-19, the EU has proposed a new package of macro-financial assistance.
Air traffic to be halted until May 22, GCAA says
Air traffic in Georgia will stay halted until May 22, 2020, Georgian Civil Aviation Agency says in a statement.
Georgian PM discusses support packages from ADB, EBRD
Prime Minister of Georgia Giorgi Gakharia held a video conference with the presidents of the EBRD and ADB regarding the possible assistance and financial resources to be allocated to Georgia due to the challenges associated with the global pandemic.
EBRD to provide €1 billion to Georgia, other countries
The EBRD and Georgia are stepping up cooperation as the country's economy faces the challenge of the coronavirus outbreak – says an official statement published on ebrd.com.
Government closes ski resorts in Georgia over COVID-19
The season at the ski resorts of Georgia closes ahead of schedule, the Prime Minister’s spokesman, Irakli Chikovani, said at a briefing.
Georgia will export armored vehicle Didgori Warrior
A new Georgian armored vehicle Didgori, equipped with a 120mm mobile mortar module, will be exported under the agreement signed between the Military Scientific-Technical Center Delta and one of the countries of the Middle East, the Ministry of Defence said.
Korter: Reliable housing property data in Georgia
It's not a simple job to find fresh homes. But when you use the estate choice service Korter, everything becomes distinct.
Rent a car in Tbilisi – Parent.ge
Are you thinking of booking the best vehicles for your next trip at a very reasonable price? If yes, then this is one of the best decisions you can ever make for yourself.
Pleasant Sunday for the whole family – Renewed Sunday’s brunch at The Biltmore Tbilisi Hotel
Summer, the season of endless fun and vacations, has ended and Tbilisi has become a usually crowded city.
GEL devalues, officials show optimism though
Devaluation of the national currency has sent shockwaves among citizens in Georgia. Officials think that the trend will return to its normal frame, though.
ProCredit Bank’s 20 years of challenges and successes in Georgia and what it means to be a responsible bank
“The bank’s 20-year long presence in Georgia was marked by many challenges and success stories.
Comments on alarming GEL devaluation
The National Bank of Georgia set a new exchange rate, according to which, dollar price became GEL 2.9507 on Tuesday.
Euronews and Silknet sign an MOU to launch “Euronews Georgia”
Euronews and Silknet, Georgia’s leading telecommunications company, are announcing the signing of an MOU in view of launching Euronews Georgia, a news channel and digital platform aimed at a Georgian-speaking audience.
Green Diamond starts to hand over flats to owners as second stage of construction finishes
Second stage of construction of Green Diamond living apartments by MAQRO Construction has finished and process of hand over of flats to owners has started.
Georgian wine tasting in the US came off excellently
Georgian wine tasting in the main cities of the US, New York, Chicago, and Boston went off excellently.
PHOTO OF THE DAY
GEL Exchange Rate
Convertor
11.08.2020
12.08.2020
USD
1
USD
3.0743
3.0747
EUR
1
EUR
3.6138
3.6272
GBP
1
GBP
4.0061
4.0294
RUB
100
RUB
4.1709
4.2244
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
USD
1
USD
3.0747
EUR
1
EUR
3.6272
GBP
1
GBP
4.0294
RUB
100
RUB
4.2244
August 2020
Mon Tue Wed Thu Fri Sat Sun
1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
31