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June13 Disaster Didn’t Strengthen Insurance Culture in the Country

The insurance culture in the country is still at a low level. In this regard, the changes were expected after the June 13 disaster when a number of companies and citizens faced huge material losses. Nevertheless, as the insurance companies say, demand for the real property insurance has not noticeably increased either from  business or citizens.

Apparently, in Georgia, where natural disasters occur frequently, the society still puts hope on nature and the Government. Mikhail Japaridze, Business Development Director at the insurance company Ardi,   notes that recently several cases of fires happened, however, the damaged companies still have not insured their businesses.

“Georgia is a little bit behind in this regard. Until the government doesn’t introduce a compulsory real property insurance, the sector will grow very slowly; 10 times and 20 times slower than in the case of compulsory insurance,” Japaridze  believes.

In his words, the real estate insurance segment has increased in the company. However, the increase is insignificant and it is hard to assess whether the June 13 flood was the impetus behind it.

Japaridze explains that corporate real estate insurance is leading kind in the country not because of the companies’ good will, but due to their credit loans. During the loan issuance, the bank requires that borrowers buy property insurance.

As for the activity of individuals, according to Japaridze, this segment insures property only in a case of  an appropriate obligation to the bank. George Shengelia, Deputy Director General of the insurance company IC Group, says that after the Tbilisi disaster, any tangible change in the real estate section was not observed. In his opinion, the insurance culture is, in general, underdeveloped in Georgia where only those who are obliged by the bank insure themselves.

He talks about an increased  activity of small and medium-sized businesses as well as a few cases of voluntary insurance of individuals. Shengelia explains the passivity of this segment of the population by a number of factors, including the currency crisis the country is experiencing.

“The demand increased, however, due to the crisis, people have no money,”  Shengelia says.

According to him, the company is working on a new property insurance product, which will be released in the market approximately in one month. At this stage Shengelia refrains from naming the details, however, he says the product will be focused on individuals. In turn, Aldagi says that demand for  the real property insurance has increased, but not dramatically. The businesses already have a property insurance liability because of bank loans, but a raised interest of individual citizens in insurance is also being observed.