Interview of “Garant-Limens” CJSC Insurance Company’s Executive Director Ligia Kazaryan to Mediamax Agency and Banks.am portal

- “Garant-Limens” is specializing in the sphere of health insurance and about 30% of this segment of the market falls on the share of your company. How do you assess the general situation and developments in medical insurance in Armenia?

- The level of medical insurance in Armenia is not high, and this is a serious problem for the entire financial system. The problem is related both to the level of life and the awareness of the population, and with the level of infrastructural and system development of healthcare as well.

Our company tries to do everything possible for our customers not to face problematic nuances of the Armenian healthcare system, although, I believe, it is practically inevitable.

Progress in the sphere of medical insurance has been noticeable especially over the past few years. We register significant growth in the number of corporate customers, which, as compared to last year, makes about 30-40%. This significantly contributes to development of insurance culture in Armenia.

- As far as I know, the share of medical insurance in your company’s portfolio exceeds 80%. Do you plan steps on diversifying the portfolio? As far as we are informed, the company considered a few ways for diversification of the portfolio, one of which is merger with another insurance company.

- One upon a time, we really considered the issue of merger with another company; however, it did not take place. Since 2009, we actively deal with other types of insurance, in particular, insurance of assistance, transport means, property, cargoes and liability, as a result of which the share of medical insurance as of the data of the first half of 2010 already makes 60%. 

Nevertheless, medical insurance has been and remains the absolute market advantage of our Company and we are not going to yield our positions in this sphere.

- Since 2009, “Garant-Limens” has been cooperating with French AXA Group Insurance Company (Inter Partner Assistance). What does that cooperation imply?

- We cooperate with AXA Group as to travel insurance. AXA Group reinsures our risks and renders us assistance. As a result, we offer an insurance product of a very high quality, and this is why its price is relatively high. If an accident takes place with our customer abroad, he/she does not have to turn to a doctor and pay. The customer should only contact AXA Group in the given country and he/she will be immediately rendered the necessary help, and the payment will be made automatically.

As of the data for the first half of 2010, we occupy the third place in the market as to travel insurance. In future, we intend to become the leader in that sphere.

- Insurance sector of Armenia is actively getting ready for introduction of Compulsory Insurance of Vehicle Owners’ Liability (CIVOCL). What are your expectations and intentions in this aspect?

- We are already a member of the Bureau of Car Insurers of Armenia and we actively prepare for sale of policies. At present, the company continues expanding its agential network. It is very important for us for our agents to be competent and educated, so that later on we do not have problems with lack of awareness and protection of customer rights.

It is a very busy period for us now: almost 80% of resources are directed at this type of insurance. We hope that CIVOCL will contribute to development of insurance in Armenia.

- Sale of CIVOCL policies was postponed till October 18th. Won’t this fact complicate the work of insurance companies?

- The delay is related to the large scale of reforms. Elaboration of norms of legal regulation, their approval and transfer to insurers is a quite resource-intensive work. Besides, the good part is that structures, which realize reforms, carry out active work with insurance companies, aiming at reaching practical solutions and these discussions have also influenced the delay in the launch of policy sale.

I believe that agential networks will allow avoiding problems. In any case, all insurers are united as to the opinion that the most difficult period will be in December.

- There is an opinion that insurance companies may not gain profit from compulsory car insurance at all. Do you agree to that?

- I cannot express a definite opinion. Calculation of insurance payments as to CIVOCL is made basing on certain factors, but since there is no volume information on corresponding statistical data in Armenia, it is not clear yet how we can rely on the accuracy of calculations carried out.

In any case, irrespective of whether this type of insurance will provide for profit or not, it will definitely contribute to broadening of other types of car insurance. 

Probably, at the initial stage, there will be a certain panic situation among insurers, however in the process the normative acts will be smoothened and the sizes of insurance payments will be adjusted to market conditions.

- In connection with implementation of the accumulative pension system, it is expected that insurance companies will also enter the struggle for management of citizens’ pension assets, along with banks and pension funds. What are your expectations from reforms?

- I don’t think that insurance companies will get involved in that process right after implementation of compulsory accumulative component in 2014. Life insurance will start being implemented in Armenia, when stable demand for voluntary pension savings will be formed in the market.

- What are the Company’s indices for the 3 quarters of 2010?

- Our profit from insurance activity following the results of 3 quarters made 52.7mln AMD, however we completed the accounting period with loss at the volume of 28mln AMD, which was formed as a result of fluctuations in the currency exchange rate.

Nevertheless, we are pleased with indices for 2010. Growth is provided as to different types of insurance. The victory in the tender for insuring cargoes of “Armincassation” was a big achievement for us. As a result of it, we realize insurance with another company.

In the course of a year, you had quite significant expenditures in connection with implementation of CIVOCL. At present, we have certain problems, related with investment activity, and this fact became a reason for losses. By the end of the year we plan to again start gaining profit.

- When, according to you, will Armenia be ready for implementation of compulsory medical insurance?

- Compulsory medical instance is directly related to the level of the country’s development, since its first precondition is the well-being of the population: citizens should have the chance to afford medical insurance.

There are also serious problems in the sphere of healthcare, which, in its turn, also hinders implementation of compulsory medical insurance.

In the sphere of healthcare they plan numerous reforms, which inspire us with hope. The concept of medical insurance is at the stage of elaboration and should be ready by the end of the year. I believe that this idea of compulsory medical insurance will mature at least in 3-4 years.