Paata LOMADZE, General Director GPI Holding

27 April 2023 — Daniela GHETU
Paata LOMADZE, General Director GPI Holding
XPRIMM: How would you describe in general the insurance market's development in 2022? What were the main challenges and how did your company overcome them?

Paata LOMADZE: In 2022, a significant growth of the insurance market was recorded - approximately 18-19 percent. This increase was mainly due to inflation and not totally attributed to organic growth dynamics. In 2021-2022, quite high inflation was observed in the country. Accordingly, services became more expensive: both in the direction of medical and car service. Consequently, we had to increase insurance premiums in a number of lines, including health, auto insurance, and property. But inflation was not the only challenge. During the post-pandemic period, a significant change in user behavior was revealed - the frequency of using medical services increased significantly. It was difficult to predict the extent of such growth, and this of course led to an increase in handling and other types of costs. The management of these expenses and increased demand for services was one of the main tasks last year and we successfully overcame the difficulty. In general, we met the written premium prognoses and achieved planned profitability for the year.

XPRIMM: Which were the business lines that saw the best evolution in 2022? 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?

P.L.: As in previous years, health insurance, auto and property insurance play a major role in the development of the market. In our portfolio, there was a significant increase in travel insurance. It can be said that it even reached a historical maximum. However, its share in our portfolio is still small. The volume of cargo and marine insurance has also increased. The indicator is not high in these segments either, however, we are happy with the growth, because we are planning to further develop in this lines. The development of professional liability insurance has great potential. There can be both medical liability and liability insurance for architects and lawyers, which serves to create a healthy environment for society, which means high risk areas of professional services, that entails certain risks of mismanagement and failure and in the event of a mistake, should also be expected to pay for the loss.

XPRIMM: Health insurance accounts for more than half of your company's business portfolio. How would you comment on the evolution of this business line the last year?

P.L.: It was a year full of challenges, as I mentioned. The pandemic and inflation caused severe consequences for the company. Financial profitability was low in 2020-2021. In 2022, we were able to manage expenses better. This was facilitated by the development of digital services. Today, about 85 percent of health insurance claims are made online. We tried to bring relationship with our providers a higher level and developed digital platforms of information exchange and accounting. These measures resulted in increased efficiency, quality and accuracy.

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?

P.L.: The prospect is quite promising. In the conditions of good administration, which is an obligation of the state, we think the market will grow. We think of around 30 percent increase. This will have a big impact on the sale of other insurance products as insurance will become more popular and penetration will grow considerably. As for the challenges, the premium is a sensitive issue here. It is established by the state. It is actually difficult to calculate. We can come to logic with assumptions, but it is necessary to observe and adjust the price accordingly.

The second important challenge is the mobilization of human resources. Insurance companies do not have the appropriate personnel yet. Therefore, it will be difficult to attract, retrain and ensure proper quality of personnel.

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.?

P.L.: Auto insurance is one of the big segments, but actually it is 8 percent of the total portfolio. We always emphasize on technological solutions for claims handling and reimbursement. Here, too, the share of online settlement is increasing. Today small losses can be reimbursed automatically in a few hours or days. We are improving this direction even more. Last year we significantly improved our product design and service - personal assistant and improved process of claims assessment.

We invest several million GEL a year for technological development. This applies to both the main software and various portals for our clients. One of them is MyGPI portal, which is computer and app based and serves as a focal point of digital contact with our clients. This is our strategic direction and we are planning to continue significant investments.

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?

P.L.: I think it is absolutely necessary to introduce these regulations. Companies must have the necessary resources to protect the interests of customers. If someone is not ready, such organization should leave the market or to prepare and attract appropriate capital. Solvency is one of the important factors for an insurance company so that the rights of its insured people can be fully guaranteed. This is also fundamental for the trust in the insurance industry in the country, both for local customers and investors. Those companies that cannot fulfill this condition will have to leave the market or expand - merge, it is also possible to attract foreign investors.

XPRIMM: What are your expectations for the Georgian insurance market evolution in 2023? What would be, in your opinion, the main challenges and the main opportunities?

P.L.: We will probably have similar challenges in 2023. It is again related to inflation. Unfortunately, we have to increase the premium of some services, including health insurance and auto insurance .

Another important factor would be improving relationships and processes with car repair workshops, as this is essential for our clients and we are planning some positive changes in this direction.

The growth of the company in terms of sales is a significant challenge, our main strategy this year is development and growth of the company with acceptable and moderate profitability. We have to ensure profitability and be ahead of market growth.