Wednesday, May 23 2012 18:00

Expert: Prodigality of Armenian insurers results in losses in compulsory motor third-party liability insurance


ArmInfo. In Q1 2012 Armenia's insurance companies paid 2.9bln AMD in compensation against 1.57bln AMD in Q1 2011.

This growth was not a surprise for the companies as they are aware that the insurance culture of the population is growing and more and more people are applying for compensation. The surprise was the reluctance of almost 1/3 of customers to renew their compulsory motor third-party liability insurance contracts.

According to independent expert Gor Khachatryan, by the end of this year the loss ratio of compulsory motor third-party liability insurance will exceed 60%, which is not critical. The problem is the high operational and administrative expenses of the local insurance companies. "Their prodigality in advertising this type of insurance has made it unprofitable, and now they are forced to introduce one more compulsory insurance type – health insurance for employees of state- funded organizations – in order to cover their losses," says the expert.

According to the Ranking of Insurance Companies of Armenia prepared by the Agency of Rating Marketing Organization (ArmInfo), in Q1 2012 the companies registered 691.1mln AMD ($1.7mln) loss. Their accumulated profit grew by 11.6% as compared with Q1 2011 and dropped by 32% in Q1 2012 to 1.8bln AMD. The premiums totaled 12.3bln AMD, the compensations - almost 3bln AMD.
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