Archil MORCHILADZE, General Director, Insurance Group of Georgia

1 November 2023 — Daniela GHETU
Archil MORCHILADZE, General Director, Insurance Group of Georgia

XPRIMM: How would you describe in general the Georgian insurance market's development this year? What were the main challenges so far and how did your company overcome them?

Archil MORCHILADZE: The Georgian insurance market maintains a growth trajectory consistent with previous years, but without any significant expansion. Its primary challenge lies in the absence of mandatory insurance schemes. As for health insurance, unlike Georgia, many countries have compulsory medical insurance. The situation on the market is further complicated by a non-competitive environment where the profits of insurance companies affiliated with the banks are significantly higher than those of others operating on the local market.

In such a challenging environment, JSC Insurance Group of Georgia – IGG focuses on promoting products in which we can compete effectively, notably corporate health insurance and motor insurance. Presently, approximately 40,000 beneficiaries are enrolled in our health insurance plans, while about 3,000 individuals have chosen our retail auto insurance offerings.

Notably, Insurance Group of Georgia was listed as the top motor transport insurance company in 2019, receiving the prestigious Golden Brand award, one of the most influential business accolades in the country.

Furthermore, it is worth highlighting that since 2018, our company has consistently maintained its registration on the whitelist of the State Procurement Agency of Georgia. This whitelist is exclusively comprised of companies that have diligently fulfilled all their obligations in good faith, further demonstrating our commitment to ethical and responsible business practices.

XPRIMM: How do you assess the company’s current status and position in the market and what are the strategic goals for its further development?

A.M.: The primary objective of our company is to uphold sustainable growth and foster customer loyalty. In fact, JSC Insurance Group of Georgia is one of the few insurance companies that operates independently of banks and financial institutions, and yet, it has achieved substantial capital growth. Since IGG entered the Georgian Market, every year, it has consistently yielded favorable financial results, contributing to the sustained profitability of the company. It should be noted that IGG was able to increase its capital fourfold solely through its earnings.

XPRIMM: Which were the business lines that saw the best evolution? Apart from the introduction of the mandatory MTPL insurance, do you see other business lines that may play a strategic role in the future development of your company?

A.M.: The development of new products in the field of insurance significantly depends on legislative regulations. The insurance industry has been waiting for the development of the mandatory MTPL insurance for the last 20 years. Significant steps have already been taken by the government: in particular, the motor liability of automobile owners at the border has begun, products of public facilities and agro-insurance are being implemented, but the introduction of Third Party Liability insurance of automobile owners is of extreme significance, as it is one of the EU-directives to be fulfilled.

To understand how the sector meets their needs requires a deeper analysis, but it definitely will not be difficult to predict their response to the fact that Georgia is the only country in Europe where compulsory third party liability insurance on motor vehicles is not enforced.

Together with other insurance companies, IGG has already requested the government to cease the expansion of the banking sector in our field and to institute specific regulations to restrict the banking sector's involvement and insurance and banking product tying resulting in enormous disparities in competitive advantages in the insurance field.

XPRIMM: In the context of the imminent implementation of the law on mandatory MTPL insurance, how do you assess the market potential of this line of business? Also, what are the main concerns regarding the debut of this new market segment?

A.M.: The implementation of mandatory Motor Third-Party Liability (MTPL) insurance should be executed in a manner that safeguards the integrity of the insurance industry. Fortunately, all insurance companies are considering a synchronized initiation of this process to emphasize the significance of insurance in general, to Georgian people. This, in turn, is anticipated to foster a broader awareness of insurance products and consequently facilitate the promotion of other offerings within the industry.

XPRIMM: The motor insurance segment's success is largely linked, in all markets, to the opportunities brought by digitalization in terms of improving underwriting, streamlining back-office operations etc. How do you assess your company's progress in technological terms? Is your company prepared to offer modern value-added services to its customers by using telematics, IoT etc.?

A.M.: Undoubtedly, digital services are important within the insurance industry, with the pandemic having served as a catalyst for their adoption. Our ability to issue policies online and facilitate online reimbursement for our consumers exemplifies our commitment to this digital transformation. In this regard, our company, along with the broader Georgian insurance system, has achieved notable success.

XPRIMM: An important regulatory change going on in the Georgian market is the transition to the Solvency II regime. In your opinion, is the market prepared for this change?

A.M.: This newly proposed regulation certainly holds the potential to enhance the stability of the insurance system in Georgia. While it is evident that not all insurance companies are currently preparing for its implementation, we firmly advocate for the enactment of Solvency II regime in the near future.

XPRIMM: What are your expectations for the Georgian insurance market evolution by the end of this year and the next one?

A.M.: The enactment of legislation mandating Compulsory Motor Third-Party Liability - MTPL insurance is certainly going to invigorate the insurance sector. The law has already been submitted to the parliament for consideration. We hope that the parliament will pass this legislation no later than this year, with the law coming into force by the conclusion of 2024.

We think that passing this law will serve as a catalyst for the development of additional insurance product offerings. 

We further hope, in a broader context, that this will transform the Georgian insurance market to a degree analogous to what is observed in other European countries.

Interview conducted by Daniela GHETU