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 • The
History of the Organization |
| Compulsory Insurance Bureau of Georgia and Insurance Companies |
| • Register |
| Insurance Legislative Base |
| • Laws, Codes, Regulations |
| Georgian
Insurance Market and State Regulation (2005) |
| • Directions
of Development • Insurance Market • Insurance Statistics |
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Georgian Insurance Market and State Regulation (2005)Directions of Development In order to regulate an insurance sphere in the country the following normative acts and laws have been elaborated in Georgia:
It should be emphasized that the Georgian Law `on Licenses and Permits` has newly regulated licensing procedures, on the basis of which Resolution No.183 of the Government of October 14, 2005 `on the rule of issuing licenses in an insurance sphere and on adoption of licensing requirements` was elaborated In non-life insurance sphere the following bylaws were adopted in 2005:
In life insurance sphere there were the following normative acts in Georgia in 2005:
Work is being done to create legislative basis for private pension insurance, although in Georgia in 1998 the Law “on non-state pension insurance and security” got in force. Pursuant to this law different authorities create base for bylaws, the greater part of which is to be worked out by Insurance State Supervision Service of Georgia. According to these normative acts core principles of non-state pension insurance shall be introduced, perfected and regulated. The following picture proves the above-mentioned:
In 1998-2006 11 bylaws were elaborated and adopted:
Work is being done to elaborate the “rule of evaluation of financial stability of founders of non-state pension scheme”. The rule of definition of constant pension gatherings fund was worked out in 2005.
National Commission of Securities prepared two significant documents, resolutions of NSC on “investments of pension assets” and on “structure and composition of non-state pension gatherings assets”.
In 2005 in Georgia there were 16 insurance companies and 13 insurance brokers (According to the Georgian law “on Licenses and Permits” which was adopted in June 24, 2005 insurance broker’s activity is not subject to licensing) licensed by Insurance State Supervision Service of Georgia, seven orgainizations of which were licensed in a private pension insurance: the first one which founded private pension scheme, was an insurance company “Pesnion and Insurance Holding”. This company implements two schemes. Any citizen can join it. Professional private pension scheme was founded by the Georgian National Bank, only personnel of the National Bank participated in it. Insurance companies “Imedi L”, “Aldagi”, “Europace”, “BCI”, “Selbi” have licenses to implement non-state pension insurance.
In 2005 two insurance companies were licensed: “ICG” LTD Georgian insurance company and “AIG Europe” (Georgian subsidiary).
In 2005 “Georgian Bank” JSC became 100% shareholder of Insurance company “BCI”, insurance company `BCI` purchased 80% share of insurance company “Europace” JSC in the same year. In December 2005 insurance company “GPI holding” JSC became 51% shareholder of insurance international company “Irao” LTD. In December 2005 “Bank Republic” JSC became 49% share holder of insurance company “Aldagi” JSC. On the 28th of October, 2005 insurance companies Selbi and Aldagi merged. Proceeding from the above mentioned we can conclude that last year insurance companies consolidated and accordingly strengthened.
According to the Georgian Law “On Facilitating the Prevention of Illicit Income Legalization”, Insurance State Supervision Service of Georgia, being Supervisory Body over insurance system has the responsibility to check whether the liabilities prescribed by the law are fulfilled by insurance companies and founders of non-state pension scheme. The Service is empowered (authorized) in case of non-fulfillment of liabilities, to impose sanctions on them pursuant to the appropriate bylaw. Together with the Financial Monitoring Service Insurance State Supervision Service of Georgia prepared the “Regulation on Receiving, Recording and Processing the Information by the Insurance Organizations and Founders of Non-pension Scheme and Forwarding it to the Financial Monitoring Service of Georgia”.
Insurance is considered to be one of the principal issues in eligible job steps and activities concerning harmonization process of Georgian Legislation with UE legislation (directives). Together with Georgian-European Policy and Legal Advice Centre (GEPLAC) Insurance State Supervision Service of Georgia worked out directions for harmonization of current Georgian insurance legislations with EU directives on the basis of which the Service prepared draft law “on making amendments and addenda” in the Georgian Law “on insurance” in which issues on organizational and legal forms of insurance companies, expansion of sanctioning systems, division of life and non-life insurance companies and etc are defined.
According to the Georgian Law on “Insurance” in order to facilitate the development of local (Georgian) companies at the first stage of formation of Georgian insurance system participation of foreign financial or legal person in the authorized capital of Georgian insurance or reinsurance organizations was determined by not more than 49% share. After becoming the member country of World Trade Organization (WTO) in 1998, the above mentioned restrictions were lifted and since then a foreign natural person, a stateless person, a foreign legal person (including insurance and reinsurance companies) has the right to be 100% share founder in the Georgian insurance and reinsurance companies.
The Georgian law “On Insurance” did not provide implementation of insurance activities on the territory of Georgia by a foreign insurance as an immediate insurer. According to the Georgian Law “on making amendments and addenda in the law on insurance” (December 29, 2004), the right to implement insurance activities on the territory of Georgia has been given to those subsidiaries (representation) of insurance and reinsurance organizations which are registered or licensed by appropriate institutions in Organization for Economic Co-operation and Development (OECD). Therefore pursuant to the resolution: “rule of issuing licenses and adoption of licensing procedures” issued by the Georgian Government (Resolution N183, October 14, 2005) if organizations which are registered in OECD implement insurance activities and establish a subsidiary (representation) on the territory of Georgia as it is specified by the law, the mentioned subsidiaries on the basis of a license issued by founder organization implement insurance activities not necessarily obtaining the same legal status as a license issued on the basis of Georgian legislation
In 2005 International Bank for Reconstruction and Development (IBRD) began implementing the project to strengthen Insurance State Supervision Service of Georgia. The chosen German consultant firm Deutsche Stiftung fur internationale rechtliche Zusammenarbeit e.V. is taking part in it. It is the organization with great experience in implementing projects in Organization for Economic Co-operation and Development (OECD) and Commonwealth of Independent States (CIS). The project is of great importance, main emphasis is laid to the issues on insurance legislation, perfection of supervisory process and core principles of International Association of Insurance Supervisors (IAIS).
While implementing the above mentioned activities Insurance State Supervision Service of Georgia cooperated with international organizations, such as International Association of Insurance Supervisors (IAIS), Insurance Supervisory Authorities of other countries, Swedish International Development Authority (SIDA), Turkish International Cooperation Administration (TIKA). Their assistance and recommendations were of great importance for the Service, the mentioned helped to increase qualification level of the staff and train them on a professional level.
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