GIA to Develop Bill for Introduction of Obligatory Insurance of Civil Responsibility of Automobile Owners

The Georgian Insurance Association (GIA) is developing a bill jointly with insurance companies on the introduction of obligatory insurance of the civil responsibility of automobile owners.

The bill will correspond to international standards, Devi Khechinashvili, the chairman of the GIA Board, told GBC.

As reported, the Government of Georgia has proposed to abolish the current law on obligatory insurance of the civil responsibility of automobile owners, because in 2004 the automobile checkup became unnecessary.

The country should develop a valuable legislative basis as an efficient mechanism of management.

“I mean that the older law was attached to technical inspection of automobiles and it laid the foundation of corruption bargains. The new Authorities cut 90 percent of the obligatory part of the law and the obligatory insurance became applicable to only 10 000 automobiles instead of 650 000. As a result, the volume of both generated premium and paid claims decreased”, Khechinashvili said.

The law should not be attached to any other obligations and it should not result in corruption bargains. “Even more so, Georgia has valuable patrol control mechanisms and the monitoring will be carried out far easier”, Khechinashvili noted.

Foreign experts will visit GIA at the end of 2010. GIA will introduce the bill after consultations with foreign experts in two-three months.

As reported, the Government of Georgia has developed a bill to abolish useless bureaucratic barriers of the Obligatory Insurance Bureau and exempt businessmen from supplementary burdens. Under the current legislature, the Obligatory Insurance Bureau accumulates 20 percent of the premium insurance companies generate a year through insurance of the civil responsibility of automobile owners. The Obligatory Insurance Bureau must direct the accumulated funds to payment of claims, but according to the statistics, the Government of Georgia has submitted to the Parliament, these funds are spent on staff salaries and almost no claims have been paid.

Under the Government-developed bill, the Obligatory Insurance Bureau liquidation process will be inaugurated in two months after the Parliament of Georgia adopts the bill. The Bureau debts will be paid from the Bureau property.

At this stage, the Obligatory Insurance Bureau employs 8 servants. David Tsereteli, the Bureau chairman, resigned at the end of December 2009.

The Parliament of Georgia will discus the bill in spring 2010.

It is worth noting that the Parliament of Georgia objects to the Government-developed bill as an obstacle for membership of the European Green Card. The Green Card statute calls on member countries to practice obligatory mechanism for automobile insurance and adopt a corresponding law.