GEORGIA: Strong devalution of GEL pushed up the insurance prices by over 30%

The local currency's devaluation let to an over 30% hike in the insurance prices, with health insurance appearing to be the most affected, reports the Georgian newspaper "The Financial". Insurers consider implementing compulsory insurance as required for the further development of the sector.

Lately, the costs of the medical supplies and services went up by 40% to 45%, putting pressure on the insurance premiums' level. In this context, IRAO, member of VIG, has increased prices of insurance products by 15-20% compared to the previous year. "Many of the components of the product pricing of this service are in direct correlation to the exchange rate. Increased prices of pharmaceutical products and medical services have had a negative impact on the rate of loss. Accordingly, this has been reflected in our company and throughout the whole of the insurance sector," a representative of the insurer stated to The Financial.

Overall, 2015 has been quite a difficult year for the Georgian insurance market. However, as the companies' representatives stated to the press, bothe VIG subsidiaries closed the year with positive results, maintaining an upswing trend. Written premiums in both the retail and corporate segment at IRAO have shown 3% growth y-o-y although the number of active policies decreased slightly. As for auto insurance, the company has seen 13% growth.

Moreover, GPI Holding representatives consider 2015 as a successful year for the company. "It has been shown in the attracted written premium and increased number of retail and corporate policyholders. Last year we implemented several important projects. The company launched the online application of auto insurance compensation. It made the process more simple, rapid and comfortable for insurers. Another innovative project was the social project of natural disaster insurance. Since Tbilisi's flooding on 13 June, 2015, we started offering this service to all auto holders. Thousands of car holders have used this service. Considering the importance of this service we will continue to offer it in 2016," said a company representative to The Financial.

As for 2016, Georgian insurers seem rather optimistic and convinced that the further development of the sector is strongly linked to the implementation of mandatory insurance services in the country. "In 2016 we expect scheduled reforms in the insurance sector will be implemented faster. This is important not only for the development of the sector, but for the improvement of general social conditions in the country. By this, I mean implementation of a mandatory policy of auto insurance which is equal to European standards," said the GPI Holding official.

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