Insurance Market Challenges

“The fate of the law on automobile third party liability insurance remains unclear”, Devi Khechinashvili, the Georgian Insurance Association President told the television program Business Partner.

This means that this bill will not be discussed in 2020, either, he added. “I know that the government realizes the importance of this bill, and that the EU also recommends that we adopt this law, because this is a necessary standard, like many other standards”, Khechinashvili said.

The Association has offered various timeframes for enforcing the law, namely to enforce it in stages, as happened in the case of the technical inspection of vehicles, he noted. Georgia has all the resources needed to form an automobile third party liability insurance system, as is practiced in Germany, Khechinashvili pointed out. As reported, this bill was submitted to the parliament in late 2018, but the document has not been discussed yet.

The government has not explained reasons for protractions, but I think the process was postponed on the eve of the upcoming elections, because it is not favorable and convenient for the ruling party to enforce this law in the pre-election period, Khechinashvili noted. “The law is stuck in the parliament, practically. The government submitted the bill to the parliament in December 2018, and the document was not discussed for a year. We have actively cooperated with the Parliament and its committees. They seem a little bit undetermined about supporting the bill or not. This is not an ordinary issue. Ultimately, they did not discuss the issue at all. No interpretations provided. I think populism, politics and the upcoming elections are the reason. They think that this is not a useful or convenient bill in the pre-election period”, Devi Khechinashvili noted. The mandatory third-party liability insurance law will incentivize the state insurance sector, because about one million citizens will be involved in insurance relations, and this will be the first insurance product for the majority of them, Khechinashvili pointed out.

According to European statistics, about 80,000 insurance cases are recorded for every million people; According to Armenian statistics, the figure is at 110,000 cases. The benefits are shared by the two parties, because the third party insurance implies two parties – a vehicle owner, who is responsible for the road accident, and a victim, Khechinashvili noted. We do not expect the parliament to discuss the bill, even in 2020, because the parliamentary elections are coming, despite the fact that the authorities realize the importance of the automobile third party liability insurance bill, and the EU’s recommendations urge the adaptation of this law.

The Georgian Insurance Association President is sure that third party insurance will be successfully enforced, because all the required chains work in order. “The insurance industry stands united in backing the automobile third party liability insurance bill, because the necessary parts already exist. I mean the police system, which is free of corruption.

We have an ideal information exchange system. All these parts are in order. We can arrange an automobile third party liability insurance system as seen in Germany. We have proved this through small mandatory programs for foreign automobile third party liability insurance. Both components for cash logistics and compensation work perfectly. We are sure that we will be able to implement this project well, and these efforts will genuinely foster the development of a culture of insurance”, Khechinashvili said.