The FINANCIAL — Within the first quarter of 2015, insurance company GPI Holding, a member of Vienna Insurance Group, made significant achievements in various lines of insurance, securing the position of leading company in the insurance industry.
Last year the company’s income increased by 32 percent, showing one of the highest increase on the market.
The company is maintaining its leadership on the market, both overall as well as in separate areas of insurance such as pension insurance, health insurance, auto insurance and property insurance.
Having an innovative approach, unique insurance products tailored to match the needs of the local population, high quality service, and a team of motivated employees – are the factors that have ensured and continue to ensure the success of GPI Holding in the Georgian market,” believes the company’s General Director Paata Lomadze.
For the same achievements, GPI Holding has just been recognized by a panel of more than 200 experts, being granted the most influential business award Golden Brand.
“The year 2014 was quite important for GPI Holding as well as the whole of the insurance sector. Last year the state insurance programmes came to an end and were transferred to the Universal Healthcare Program administered by the Georgia’s Ministry of Health. Due to this change the annual written premium on the whole insurance market decreased by 65 percent,” said Lomadze.
However, the share of the state insurance programmes in GPI Holding’s portfolio did not exceed 25-26 percent.
“In 2014 our company faced two challenges – one, to balance the difference in the written premium, and second, to maintain the profit. I think we overcame the challenges with great success and the numbers prove it – in 2014 GPI Holding’s income increased by 32 percent showing the biggest increase on the market overall. Meanwhile, our market share increased by 8 percent, which means that the company holds a 26 percent share of the total insurance market,” Lomadze said.
Health insurance and auto insurance are still the most popular products among GPI Holding’s customers, followed by property insurance.
Today, along with other products, GPI Holding offers corporate as well as individual health insurance packages to its customers.
Q. What are the challenges that the Georgian insurance market faces currently?
A. Insurance market development is of course affected by the country’s economic development at large. The stronger the economy is in the county, the higher the insurance consumption level. This is why we think that by developing the insurance market we are contributing to the development of the country’s economy at the same time. This is a part of our vision.
I consider the long-term perspective for developing the insurance sector to be the biggest challenge nowadays. For this it is important to have legislative initiatives and implement obligatory insurance products which are one of the fundamental principles for stable development of the sector.
One vivid example is the absence of motor owners’ obligatory third party liability law. Georgia is still among the five countries where a law of obligatory auto insurance has not been approved yet. If we talk about attracting more tourists and investors, we should understand that having a safe environment is the biggest value for them.
The second most important issue is the financial reliability of the insurance companies. Obligatory liability insurance is a very serious project and the insurance market should be ready to implement it. This means that all the companies should be reliable and should have the highest standards of accountability. We, as a Vienna Insurance Group member company, operate under the European standards of financial accountability, however not all the companies are in line with these requirements.
Q. What about agro insurance? The state planned to create a national agricultural insurance system. Have the state and the insurance companies been working together on this direction?
A. Agro insurance is one of the most important projects to have been implemented in our sector.
Last year GPI Holding was actively involved in the pilot project and made up more than 50 percent of the market.
In terms of agro insurance, the state plans to create a national agricultural insurance system. Through this system the state intends to subsidize some part of the insurance premium. This system aims to have more people involved in insurance. Agriculture is one of the main priorities of the Government. There should be a good, strong agro insurance package in Georgia. Together with the Government we are working on the further development of this direction. This system is also planned to start in 2015. Hail storms are one of the biggest risks affecting Georgian farmers.
We compensated for damage that affected more than 1,500 farmers, damage coming to more than GEL 400,000. It was a great support for each farmer.
This year the programme has continued in a different way. The state pays less in the premium and the farmers’ fees have increased, while before the state subsidized some part of the insurance premium. This will discourage farmers from using the agro insurance product.
Q. Vienna Insurance Group General Director Peter Hagen visited Georgia and met with government representatives. Please can you give us more details about the meeting and his visit?
A. Peter Hagen’s visit was very important, not only for our company but for the country’s insurance market as a whole. His visit once again proves that Europe’s leading insurance group has a big interest in Georgia and its investment potential.
Vienna Insurance Group is one of the largest direct investors in Georgia. In 2010-2011 the Group invested GEL 55 million in the development of the hospital network in the regions of Georgia. 16 clinics were built in Georgia’s 16 regions in 2011, which currently serves 618 beds.
The main reason for Peter Hagen’s visit to Georgia was to see the local companies as well as to meet the representatives of Georgian government and express his commitment.
Vienna Insurance Group is interested in developing the insurance market in Georgia and is ready to implement investments in the country. Mr. Hagen had a very interesting meeting with Mr. Giorgi Kvirikashvili, Minister of the Economy and sustainable development of Georgia. Minister Giorgi Kvirikashvili. At the meeting we have discussed legislative and other kinds of reforms that will encourage the growth in the industry, namely: auto owners’ liability insurance, pension reform and accountability standard in the industry.
Q. GPI Holding has begun a new eco campaign. How did you come up with this idea?
A. Air pollution is one of the biggest challenges for us. Harmful substances in the air exceed the allowable limit by 300 percent and are a very serious factor in mortality rates. This is mainly due to vehicle emissions. We, as a leading company in auto insurance, tried to contribute to solving this problem by linking the problem of auto emissions and auto insurance by launching an eco-campaign.
The main objective of the campaign is to give more privileges to the owners of the cars with less pollution. In various countries more eco-friendly vehicles are encouraged through legal, taxation or other means so that to improve the balance between the old and relatively new car and thus decrease pollution. We have decided to be the first private company which provides such privilege and hope that this attitude will be spread on other levels also. The eco project is supported by the NGO’s active in this field – Partnership for Road Safety and the Georgian Alliance for Safe Roads.
The project will have several stages. The first one, which has already started, is to inform citizens and draw attention to eco-friendly cars through special initiatives.
Especially for this project, GPI Holding has created a special eco-policy, which offers a 20 percent discount on the standard insurance package for eco-friendly cars as well as prizes and gifts Eco-driving rules are incorporated in the policy so that to allow less usage of gas and thus less pollution.
As part of the private sector, we have a social responsibility and we chose the direction which is directly related to our company’s activities. We are the leaders in car insurance and think that with this project, we will be able to exert some pressure and improve the ecological situation in Georgia.