Insurance business abides by ethics
07 October, 2010

Insurance companies of Georgia signed a code of ethics on September 22, 2010. The initiative is a precondition of improved insurance service, better consumer rights protection and fairer competition at insurance market.

Association of Georgian Insurance Companies (AGIC) in cooperation with the Health Project of USAID (US Agency for International Development), initiates partnership for improved insurance culture through increase of service quality and raise awareness of consumers. Ministry of Health, Labor, and Social Protection support the initiative.
The joint initiative

aims to improve the quality of insurance service to insured people, as well as insurance of protection consumers’ right and raise awareness of Georgian population in insurance products specifically of health insurance.
The point is that in July of this year, government transformed the non-governmental watch-dog Mediator been handling with the protection of consumers right in insurance sector [via consultation, mediating at courts etc] into the state-owned company. Mediator is now responsible for protection rights of consumers insured in frames of the state-budget-supported programs including people employed at defense and military structure, law-enforcers, teachers, and socially vulnerable people. The number of such insured population accounts for 1. 2 million ultimately that makes the bigger portion of the total amount of insured people in Georgia figuring to 1.5 all in all. The remainder 300 thousand is insured by private insurance companies and seems vulnerable to violation consumer rights. Besides the state provides by health-insurance, that takes the bigger portion of the entire insurance business actually, but the clientele of other insurance products also need care and protection, Devi Khechinashvili, President of the Association of Georgian Insurance Companies, believes.


“That’s why we initiated this project in cooperation with USAID and aim to help these 300 thousand to be in course of affairs, raise their awareness in all sorts of insurance service products,”Khechinashvili told Georgian Journal. “An experimental working group has already been working for a month by knocking door-to-door across the country to find out what problems already insured or potential insurance clients have.”
Moreover to insure better service and make insurance market competition healthier the 12 member-companies of AGIC worked out and signed an Ethic Code that obliges assignees to observe morale principles of the code lest be an outcast in the sector. This first ethic code a concrete sector of Georgian business found apt to adopt. Georgian banks initiated ethic code last year, however few banks signed it and the ventures werehalted. Khechinashvili believes the ethic code is a guarantee of corporate reputation and will increase social responsibility of insurance companies and make the insurance industry much more transparent.

According to Khechinahsvili, on one hand the code regulates inter-sector business ethic so as to prevent anti-insurance-business activities, that some newly fledged companies affiliated with pharmaceutics industry practiced lately affecting insurance companies’ interests. He meant Alfa, an insurance company founded by Aversi, one of the Georgian pharmaceutics market monopolist players, that while advertising its service offended insurance market players.
“Alfa is not an insurance-company, it is an augmentation of Aversi in fact, but if it signs the ethic code it will be forced to behave itself insurance-oriented and not as a pharmaceutical company, there is an obvious interest clash that Aversi runs an insurance business and uses it to improve sales of Aversi in fact. The ethic code cannot act as a criminal code but it is a matter of honor to sign it and once a company signs the code it should observe its principles and never undertake an action that can affect interests of its peer companies. Social responsibility and reputation is very important in insurance business, because if any of them spoils its product it affects the entire industry, that’s why the Code is important,” Khechinahsvili said.
On the other hand the code can improve protection of consumers’ rights. Consumer can appeal to AGIC if any of its members violates the code morale and discriminates consumers. AGIC will discuss the issue to reprimand the culprit company and even oust it from the Association if the company does not comply with the rules again.