Peculiarities of implementation of insurance activities in Georgia

Prepared by Tata Toria

For implementation of insurance activities in Georgia it is first of all necessary to obtain a corresponding license.

A license for implementation of insurance activities can be issued only to those legal persons, the purpose of which is insurance and the activities related to it.
The license is issued for implementation of personal, property and responsibility insurance both in voluntary and compulsory form, as well as for reinsurance. The kind of insurance, the right for implementation of which the insurer has, should be also indicated in the license.
A license for insurance activities is issued to a concrete insurer. Its handing over to other legal persons is not allowed. The license is termless and is valid in the whole territory of Georgia. A legal person receives the status of an insurer (reinsurer), insurance broker and the right to implement insurance activities only after obtaining of the license.
Activities of an insurance agent as well as activities related to evaluation of the volume of damage and trustworthiness of the case, consulting and research services in the insurance sphere do not require licensing.
Registration of an insurer, as an organization, is implemented in accordance with the order of registration of legal persons existing in Georgia. Only limited liability companies and joint-stock companies are allowed as the organizational-legal form of insurance organizations. It is prohibited for a budget organization to establish an insurance organization.
The license is issued to an insurer only on the basis of an application, which should be enclosed with:
1. Copies of establishment documents.
2. A copy of the state registration document, in accordance with which the insurer is considered as a legal person.
3. Certificates concerning the authorized capital.
4. Data on the managing persons.
5. A business plan, terms in accordance with kinds of insurance, insurance contract (insurance certificate, policy, certificates and insurance tariffs).
6. A document confirming the payment of the license duty.
In case of reorganization, its right to the license is passed on to the assignee of the latter that will obtain a corresponding license instead of the old one. An application concerning license change should be enclosed with: the decision concerning the legal person’s reorganization; a copy of the document on the state registration of the insurer’s assignee.
Existence of the insurer’s authorized capital, insurance reserves and reinsurance is the basis for securing its financial solidity. (Reinsurance – an operation between two insurance companies in which, according to the insurance (reinsurance) contract, one of the parties assumes a part of the risk instead of the payment of the insurance premium).
An insurer and an insurance broker are obliged to observe the following economic limits established by the State Insurance Supervision Service of Georgia:
1. The minimal amount of the authorized capital (including the money form) in taking of the license.
2. The order of creation of insurance reserves and funds.
3. The order of placing and investment of insurance reserves and funds.
4. The limit correlation between assets and assumed insurance obligations.
5. The limit correlation between attracted financial means and the own capital.
With the purpose of fulfillment of the assumed insurance obligations, on the basis of insurance fees an insurer creates the necessary reserves for expected insurance compensation.
Insurance reserves created by an insurer are not taxed.
As for foreign physical persons, stateless persons and foreign legal persons (including foreign insurance and reinsurance organizations), they have the right to be participants of Georgian insurance and reinsurance organizations. The total share of participation of the mentioned persons in the authorized capital of Georgian insurance and reinsurance organizations should not exceed 49%.
Foreign citizens, legal persons set up in the territory of Georgia by means of foreign capital, subsidiaries and representative offices of foreign legal persons implement insurance activities in Georgian insurance organizations in accordance with the legislation existing in the country.
Activities of foreign insurance organizations as direct insurers are prohibited in the territory of Georgia. They can fulfill functions of an insurance broker in the territory of Georgia only in the sphere of reinsurance abroad of the risk assumed by a Georgian insurance organization.
In Georgia, foreign legal persons implement activities of an insurance broker by means of subsidiaries or representative offices that are registered in accordance with the established order and have concluded direct contracts with Georgian legal persons.
Subsidiaries (representative offices) of foreign legal persons, during the whole period of their activities, should have the national or foreign currency or securities on the deposit in a Georgian commercial bank.
A license to the mentioned subsidiaries (representative offices) is issued on the basis of a corresponding application. The following should be indicated in it:
1. The name of the founding insurance or reinsurance organization and the name of the country in which it is located.
2. Location of the subsidiary and information on the scale of its activities.
3. Information on the persons authorized to implement representative activities.
4. A copy of the statute of the founding insurance or reinsurance organization and the subsidiary’s regulations.
5. A copy of the license for implementation of insurance activities issued to the founding organization by the authorized body in the country of its location.
6. A report on the insurance activities implemented by the founding insurance or reinsurance organization in the territory of the country of its location during the last 3 years.
An application for obtaining of the license should be considered by the State Insurance Supervision Service of Georgia during the period of one month.
The rates of the license duty for implementation of insurance activities are as follows:
a) Life insurance – 500 GEL.
b) Pension insurance – 500 GEL.
c) Accident and illness insurance – 500 GEL.
d) Medical insurance – 500 GEL.
e) Insurance of land vehicles – 500 GEL.
f) Insurance of air vehicles – 500 GEL.
g) Insurance of water vehicles – 500 GEL.
h) Cargo insurance – 500 GEL.
i) Financial risk insurance – 500 GEL.
j) Insurance of civil liability of motor transport owners – 500 GEL.
k) Insurance of carriers’ civil liability – 500 GEL.
l) Insurance of professional liability – 500 GEL.
m) Insurance of the liability related to implementation of obligations – 500 GEL.
n) Reinsurance – 500 GEL.
o) Intermediary activities in the insurance sphere – 500 GEL.