2016 expected to be a challenging year for the Georgian market

"2016 will be an extremely challenging year for the Georgian insurance market," Vakhtang DEKANOSIDZE, General Director of IRAO (Vienna Insurance Group), recently stated for the Georgian journel The FINANCIAL. However, despite the challenging environment, the VIG subsidiary plans to maintain its high growth pace also in this year, he added.

IRAO's leader explained that insurance products are still considered to be luxury goods in Georgia, a general perception that needs to be changed, making insurance products to be seen as a neccesity. In his view, the local market is not yet matured, showing an asymmetric structure, with important discrepancies between the development levels of different lines of insurance. In addition, many of the business lines "differ from classic lines of insurance that exist on developed markets". Another reason of the market's immaturity is the lack of traditionally compulsory types of insurance, as MTPL, , employer's liability insurance, etc. "Launching compulsory lines of insurance would become a trigger for formulating a symmetric and comprehensive market," DEKANOSIDZE stressed out.

As for the 2016 perspectives, the currency depreciation processes, in Georgia, as well as in the whole region is one of the most challenging factors which will make "maintaining year-to-year growth of the company is an extremely tough issue".

"Still, the average growth rate of IRAO during the last three years has been equal to 20% and we are very confident that we will properly manage to maintain this growth trend during the year 2016," the VIG subsidiary's CEO said.

At the end of September 2015, the Georgian insurance industry totaled GEL 292 million (EUR 109 million), as the figures published by the Insurance Supervisory Office showed. Compared with 3Q2014, the local insurance market increased by 29.4% y-o-y, due to the 94% growth rate reported on the health insurance segment.

Per insurance classes, the GWP portfolio was formed in proportion of 44.5% - health insurance, 19.6% - property insurance, 14.9% - motor hull policies and 6.1% - life. The remaining rest (15%) was completed by other non-life sub-classes.

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