The third show in the series broadcasted under the titles "Re/insurance markets facing the Covid crisis" had as guest top representatives of the Georgian insurance market: David ONOPRISHVILI, Chairman, Insurance State Supervision Service of Georgia; Devi KHECHINASHVILI, President of the Georgian Insurance Association; Giorgi BARATASHVILI, General Manager, Aldagi and Michael JAPARIDZE, CEO, ARDI Insurance.
Speaking about economic environment in Georgia and the insurance market's evolution in 2020, David ONOPRISHVILI said: "It is difficult to make any forecast, but there are indications that the Georgian economy may recover this year's fall, which will also have a positive impact on the insurance business. Moreover, if the MTPL Law will be passed next year, the market will definitely have a more wider revenue base. We are also working with the World Bank to start the life insurance business in Georgia. It will take some time, but we're already on our way. Next year, the laws on medical liability and construction liability, currently in preparation, will also pass. Considering all these factors together, in my opinion, the market should have good perspective starting from the next year."
Devi KHECHINASHVILI further explained: "In the first half of the year we had a significant drop in pure loss ratios, especially on motor and on the medical segment, which is 40 percent of our business, therefore the result of the result of six months is positive, but we need to see the nine-month results which according to the information we have will probably show a reversing dynamic. The most part of our industry's business is related to the corporate segment which means that our own results will depend on the economic environment. For example, we have lost a significant part of the very profitable business lines connected with tourism, so we are now in a situation where we have to operate more and more efficient. In the long run, this may lead to a good outcome for the industry, which will operate in a more efficient manner."
In a market with a peculiar portfolio structure, in which health insurance holds an almost 50% share, Michael JAPARIDZE emphasized the challenges ahead this segment of business: "I would say the biggest challenge for the health insurance industry, other than Covid, is coping with the inflation, because if inflation wouldn't be in check and prices will go up rapidly, this will put huge constraint on the pricing of the health insurance. Once set, the price for health insurance remains stable for the year, but there are instances when medical care prices are increasing three, four or five times during the year, which puts a high pressure on our financial results because in health insurance margins, if any, are very small. There is no buffer for insurance companies in health insurance product to have like some reserves to manipulate it."
Of course, among all difficulties and new challenges adding to the older unsolved issues, insurers had to choose their priorities. Giorgi BARATASHVILI: "Our first challenge, of course, is to keep our staff. We've been positioning as one of the stable companies on the market for the last 30 years in Georgia and my personal goal is to keep all my employees. That's a top priority for the company, among others because unfortunately in Georgia we don't have any school where a person can learn insurance and there are about 5,500 people in the country whom we have trained for this business. Of course, to support our clients is another priority and, on top of that, the main issue will be to retain the revenue, or better said, retain not the revenue, but the gross written premiums volume. Usually we are looking at the revenue, but this year more important than ever, is the gross written premium."