Insurance Market Briefing 2011 by FINANCIAL Brokers Georgia

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The FINANCIAL — Insurance industry in Georgia experienced lots of changes in 2011 applying on the way this market is developing in 2012. The government has implemented reforms in healthcare system, which led to increasing number of insured and obtaining access to medical care in remote areas.

Comparing to the previous years, clients became more informed about insurance in general. Insurance products are already considered not only as a mandatory part of collaboration, or exuberant, but as protection against the risks that may arise in the course of doing business. 
However, as the market is dynamically moving, not all changes appear to be positive and supportive for its stakeholders. This period is also associated with two insurance companies gone out of business, reorganizations, and financial difficulties of those market players who are left.


The report completed by Financial Brokers Georgia, includes all the main events in insurance sector for 2011, with a stress on business-related, corporative insurance, and gives a brief forecast of the market in the following years. Moreover, the company has done a research involving both insurance companies and corporate clients, to find out their opinions and look from the insides.


The increasing number of insured by the governmental programs clearly affected service level in corporate and retail sectors. Insurance companies began to experience a lack of personnel, so the main problems for corporate clients now  are connection with the call center, signing up for the family doctor, and compensation. 

However, according to Georgian Insurance Association, the corporate insurance sector is a cause of losses to some insurance companies. This can be explained by increased requirements of the clients and frequent change of insurers. Despite the fact, that the ratio of profits and losses is regulating pricing on the market to a certain extent, in a competitive environment some insurance companies try to lure customers by their reduced insurance premiums and improved conditions of the policy. The problem is that in such cases the promises given are not always the promises to be kept. 


In the field of non-life insurance, the risk of catastrophic loss was minimized with the introduction of regulations by the National Bank of Georgia on reinsurance, which caused rise in prices. For example, if previously the insurance company could give an offer of 0.1% from the total cost on financial risks insurance – its pricing now depends mainly on reinsurers, and nowadays ranges from 1.8 to 3 percent or more.


However, health insurance sector is not protected from the negative trends, and unprofitable corporate clients on the insurance market are very common. It is logical to assume that in such cases insurance companies have to either hope that the client remains with them next year, and therefore the income from him will cover the losses of the previous year, or to create artificial barriers to the client obtaining medical services, in order to reduce losses in the current year.


Giving the comments on report is KPMG. 
In general terms the Georgian insurance market developed during the last decade. The advancement is clearly visible in terms of products and services on offer and the range of choices for the customer.
However, there are areas where it greatly lags behind the Western markets and simply cannot compete with them. There is too much bureaucracy within the insurance companies and this is a cause for a lot of inconvenience for the customers. Also, great improvements are needed in the field of operations management. At the moment this area is very inefficient. If we were to look at the insurance companies from the point of view of operational procedures the insurance service is not entirely customer-oriented.


In such events, the director of Financial Brokers Georgia, Margo Zhiznevskaya stresses out that the quality of service should be the subject to strict control. 
“The monitoring should be done before problems appear – to avoid them. Besides, there are cases when insurance companies give quite satisfactory replies on non-compensation, which are not the subject to the agreement. FBG has been prepared to this process, and our corporate clients are still protected from the negligence of the insurance companies. “ – she says.



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