GEORGIA: in the context of rising inflation, insurance products have risen in price by 10-15%

12 July 2022 — Marina MAGNAVAL
High inflation (13%), affecting the Georgian economy like almost all others, has determined rising prices for products and services, insurance included. Thus, insurance products' prices have risen by about 10-15%, according to the CEO of the insurance company Global Benefit, Nino KOBAKHIDZE, Business Georgia wrote.

"The insurance sector does not operate with high profitability. On the contrary, year after year this business becomes less and less profitable. Insurance rates are calculated considering inflation. Every year there is an increase of about 7-8%, depending on the general level of price growth", explained Nino KOBAKHIDZE.

She is confident that the insurance sector will be in a difficult situation until mandatory insurance products are introduced. "While this is not the case, the market is also growing very slowly. Given that, if we want to get the status of a candidate for the European Union, without compulsory insurance it is almost impossible. As soon as the situation in this regard changes, the insurance sector will become attractive for investors", says KOBAKHIDZE.

"There are one and a half million cars in Georgia, and no one is forcing their owners to insure, but at the same time, several tens of thousands of traffic accidents occur a year. Therefore, recovery of these damages should not be put on drivers' shoulders. In almost in all countries, except Georgia and a few African countries, third party liability insurance is mandatory. In the case of compulsory insurance, compensation is made without exception, regardless of fault. Compulsory insurance is a social product that compensates for all losses from an accident," said Devi KHECHINASHVILI, head of the Georgian Insurance Association.

The post-pandemic period has been challenging for the insurance market. Net profit of the companies decreased by almost three times and in the first quarter of 2022 amounted to GEL 4.7 million (EUR 1.36 million). There are 18 insurance companies operating in the market, which collected GEL 267.6 million of insurance premiums in the first quarter. The leading insurance product is health insurance with a share of 55%, writes Business Georgia.

*1 EUR = 3.4496 GEL (March 31st 2022)

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