In 2016 net profits of insurance companies rose 9 times. According to the report published by Insurance Supervision Service, in 2016 net profits of insurance companies marked 18.86 million GEL, while the sector’s profits marked 2.63 million GEL in 2015.
What factors have driven a growth in profits of insurance companies and how productive are the 18 million GEL revenues for 14 insurance companies?
Devi Khechinashvili, head of Association of Insurance Companies, told Business Course program that 18 million GEL profits on a 400 million market is not a good indicator. In 2016 the sector’s total profits made up 4% and this is not a positive indicator, he said.
Devi Khechinashvili explains that in health insurance segment losses made up almost 100%, while better situation is recorded in other directions. As to factors fostering growth, in 2015 corporate structure was different. Moreover, Imedi L carried out IPO, he said.
Insurance sector expert Giorgi Gigolashvili says that the 2016 profits growth is related to GEL exchange rate stabilization. In 2015, when GEL rate extremely plunged, insurance companies corrected prices, they could not increase prices and that’s why they failed to end the year in profits, he added.
“The insurance sector met the year of 2016 prepared. They saw GEL exchange rate got stabilized and set due prices on packages. In 2015 prices rose amid the devaluation and prices could not be corrected, while in 2016 prices were corrected. Naturally, the 2016 profits would be higher than in 2015”, Giorgi Gigolashvili said.