The perspectives of the development of life insurance market in Georgia

Abstract

Long-term savings accumulated by insurance companies not only provide financial stability to the beneficiaries of certain schemes, but also play a major role in the development of the economy of a country as a whole. Funds mobilized by life insurance products are shown to be the main source for the long-term investments in private as well as state sectors. Flowing from its importance for the country’s economy, the research aims to analyze the current situation of the life insurance market in Georgia in order to determine the perspectives of its future development. Considering the aforementioned, within the research, studies were carried out on developing regions on one hand, and on the other the trends characteristic for the European life insurance market. On this background, a multilayered analysis of statistical and financial data of the Georgian life insurance sector was realized, consequently showing the main problems in the form of the unstable economic environment, undeveloped capital market, absence of compulsory insurance, and public distrust toward insurers. Considering the present situation, the subsequent recommendations were developed, such as: accomplishing efforts geared toward achieving and retaining a low level of inflation; necessity of establishing compulsory insurance in the shortest time possible and creating incentives for foreign insurers to enter the local market; setting tax reliefs for the revenues received from life insurance schemes; striving to have a better informed public and to gain their trust toward financial institutions, and ensuring the professionalism of insurance intermediaries. Bearing all of the aforementioned in mind, a significant progress is expected in the life insurance sector.