Georgia's insurance sector regulator plans to introduce a new solvency assessment system based on European standards. This means that the sector is entering a new phase, Business Georgia writes.

According to the Chairman of the Board of the Insurance Association of Georgia, Devi Khechinashvili, this process is inevitable and will allow both companies and the regulator to better assess business prospects. “This new regulation is what the world is built on today. This is not an easy process, and we are ready and preparing for it to begin. This means that insurance companies and the regulator will be able to much better assess the future of the business, which is very important for everyone”, Devi Khechinashvili explained.

The Chairman of the Board of the Insurance Association noted that the new Solvency II system is significantly different from the current model. While the old system only required capital commensurate with risks, the new approach, using advanced modeling, provides a more accurate quantitative representation of risks.

However, the association does not hide that introduction of new rules involves additional costs for companies - the main costs fall on digitalization and training of qualified personnel. “Costs in this regard have certainly increased, and a little more money will be needed, in terms of costs, both for training qualified personnel and for digitalization”, Devi Khechinashvili added.

As for whether an increase in costs will affect insurance policies, Khechinashvili noted that intense competition in the market is holding back price increases. "The price of a service in Georgia is determined by very intense competition. What the insurance industry can do and how it can offer it to clients will largely depend on competition", he emphasized.

Transition to the new system will not be immediate. According to Devi Khechinashvili, the process will begin in 2026 and will be spread over several years so that companies, especially small players, can adapt. "If you look at Europe, such transition took several years. It will be the same here. Smaller companies are given an opportunity to gradually switch to this system over a certain period of time", said the Chairman of the Board of the Insurance Association of Georgia.