The National Competition Agency of Georgia, to study the current market situation and the competitive environment, has begun monitoring the insurance market and its relationship with the banking sector. "We have been talking about this problem for many years - banks and their affiliates should be banned from holding assets in insurance companies. For example, 91-92% of products with the least loss, such as life insurance, are owned by companies affiliated with banks. We collected data for the last 3 years, and it turned out that the profit of insurance companies affiliated with banks is significantly higher than that of independent market players. Moreover, profits are growing. The profits of the insurance industry practically consist of the profits of banks, and non-banking companies are almost completely unprofitable", says Archil Morchiladze.
The head of the Insurance Group of Georgia believes that there are other problems besides the difference in profit levels, and this situation also reduces the level of competition in the market. "Recently, there has been a lot of talk about the need to introduce compulsory vehicle insurance, and this is a very large market for about GEL 400 million. But even in this segment, the privileged position of certain companies can reduce competition in the market. Therefore, we expect that the antimonopoly body will determine the real situation, and then the state should intervene and make specific decisions", he explained.
The monitoring of the Competition Agency began based on the information provided in the Financial Stability Report for 2022 of the Insurance Union and the National Bank of Georgia, where it is noted that possible restriction of competition in the insurance market by banks remains a problem. Market monitoring will be carried out in the format of active coordination with the National Bank of Georgia and the Insurance Supervision Service.