Net profit of Georgian insurance companies amounted to GEL 13.5 million in the past 9 months of 2017 which is 1,7 times less than in the same period in 2016 that has become the trend of recent years.
And this happens amid increased volume of premiums – in the three quarters of 2017 this figure was GEL 345.7 million, while in the same period of 2016 – GEL 316.3 million. In other words, the profits of insurance companies should grow along with the growth of premiums, but the opposite happens that can be explained by the increased expenses of the insurance business.
According to the head of the Insurance Association Devi Khechinashvili, figures on specific companies are more important than the total sector’s profit.
"The main thing is the financial indicators of individual companies. One can see a big profit, but another can suffer a loss. But in general, the insurance business is unprofitable," he says.
In Khechinashvili’s words, the reason for this is that the expenses of insurance companies have grown and profits have remained unchanged first of all in the health insurance.
"The number of those who enjoy insurance services does not grow, business does not develop because private and state insurance cannot be synchronized. The situation is complicated by inflation because of which the cost of medical services is constantly growing, "Davi Khechinashvili explains.
He notes that the government recognizes it adopted unilateral decisions within the universal healthcare program and did not synchronize it with the private sector.
"Insurance relations should develop. The government realizes that unilateral decisions have been adopted, and now legislative changes are needed, " the head of the Association explains.
“Parliament is considering the issue of compulsory insurance of foreign cars, and innovations in terms of public security are also planned. We hope that by 2018 the insurance industry will adapt to the changes and we’ll achieve synchronization of the private sector with the state, " Khechinashvili notes.
At present, 16 insurance companies are registered in Georgia, the main service on the country's insurance market is health care, other services, including auto insurance, are very poorly developed.
Only 5% of the auto fleet are insured in the country.