GEORGIA: Bank of Georgia is creating its insurance company, while insurers demand to limit access of the banks to the insurance market

According to Devi KHECHINASHVILI, Chairman of the Board, Georgian Insurance Association, Bank of Georgia is creating its own insurance company. The new insurer already received a permission from the National Bank and is going to apply to the State Insurance Supervision Service.

Since the Bank of Georgia is one of the two main banks of the country, creation of an insurance company requires an appropriate permission from the National Bank. However, at this moment representatives of the Bank do not provide any details about the start of the new company's operation, its name or segment of its planned insurance activity.

Regarding creation of the new insurer, the representatives of the National Bank explained that commercial banks are allowed to participate as mediators on the financial market, banks have the right to create financial subsidiaries, including insurance companies. This is not considered as their non-core business and does not contradict the existing legislation.

At the same time 12 insurers of Georgia protest against banks' interference into insurance business. According to representatives of those insurers, banks, that have their own insurance companies, do not give loans to other market participants due to competition while providing unlimited financial support to theirs insurance companies.

On December 12 representatives of the mentioned insurers announced that "insurance business must be equal to non-core activity, thus commercial banks should have no access to this sector". Insurers require restriction of the rights of banks to conduct insurance activity. "We demand that the law on competition to be extended to the banking sector. Consumers, taking loans and dealing with banks, should keep options open", said the Head of ALDAGI, Giorgi BARATASHVILI.

"The situation in the insurance is getting more and more uncontrolled, and the line between the banking and insurance businesses is gradually erasing. The number of companies, controlled by the banks, is increasing and this limits the competition on the market. The National Bank provides commercial banks with an opportunity to create insurance companies, and if this continues, independent players will have no more room in this area of business activity", pointed out the director of UNISON, Vasil AKHRAKHADZE.

According to KHECHINASHVILI, one of the main problems is sale of insurance policies via banks. "It often happens that banks offer their clients insurance products of their own insurance companies, and this should be stopped. Relations between the banking and insurance businesses must be regulated. In particular, such issues as access to the market, conditions to access the market, etc. All that must be regulated within the law on competition", he added.

Follow XPRIMM Publications on LinkedIn, for more data on the insurance and financial industry.

Share |

Related articles

GEORGIA: Starting in 2019 the model of financing universal health insurance in the country will change

Beginning in 2019, Georgia will change the model of financing within the General Health Insurance program. According to the Ministry of health the new system of reimbursement provides for transition to a model of diagnostically related groups (DRG), based on which a patient's diagnosis, age, length of hospitalization, and other criteria will determine the amount of funding, wrote Business Georgia.



ALLIANZ announced three executives appointments

German insurance Group ALLIANZ announced three senior leadership appointments at ALLIANZ DIGITAL Health, ALLIANZ Private Krankenversicherung and Allianz Global Corporate & Specialty SE.



Inclusive insurance on the agenda of the second CEE & SEE - Regional Actuarial Insurance Conference in Skopje, Macedonia

Insurance should be accessible to all social classes, regardless of their wealth and income status. Products offered today are conventional insurance products, largely inspired from the developed markets as "one-size-fits-all" solutions, affordable to only middle- and high-income clients in the Eastern Europe's emerging & developing markets. The low insurance penetration rates across the region show the need for another approach.


Reducing the risks in agriculture by using insurance means, discussed in Skopje

On November 1st, an Agricultural insurance conference took place in Skopje, Macedonia, organized by the Insurance Supervision Agency in cooperation with the Ministry of Agriculture, Forestry and Water Economy. Drawing attention to the necessity of reducing the risks in agriculture by using insurance was the event's main purpose.


IIF 2018 - Insurance in a DIGITAL WORLD

Emmanuel DJENGUE, Innovation Director, Europe - RGAX, Spain is the Keynote Speaker at IIF 2018 - Insurance in a DIGITAL WORLD Conference in Bucharest, on November 27.


See all