June 16, 2010 - 16:29 AMT
INTERVIEW
Andranik Ohanjanyan:
Obligatory car insurance introduction keeps Armenian market waiting
The Armenian parliament adopted May 18, 2010 a law on obligatory car insurance, which will take effect January 1, 2011. Acting director of the Association of Armenian Insurance market Members Andranik Ohanjanyan commented to PanARMENIAN.Net on the changes which can be expected and how the republic’s population can react to the innovation.
Are there favorable conditions for the development of the Armenian insurance market?
The Armenian insurance market falls behind those in other CIS and Eastern European countries by the index of insurance policy per capita.

What are the peculiarities of the Armenian insurance market?
The insurance culture is being introduced in Armenia with difficulties. Viewed here as a stimulus for the insurance market, in other countries this phenomenon is perceived as reduction or neutralization of a object which represents a public menace. The point is not how to pay less but how to use the service offered instead. The Armenian law on obligatory car insurance is the simplest and most liberal model, which offered privileges and rights to the aggrieved party. The law also provides for exact terms and payment procedure.

How will the price policy be determined?
To determine the price policy for the obligatory car insurance, truthful statistics of car accidents is essential. According to preliminary data, car insurance will cost AMD 30-50 thousand per annum.

Are any bonuses envisaged?
The law says that after the expiration of two years, i.e. from January 2013, a system of bonus malus will be introduced to provide responsible car owners with bonus points and impose penalty points on unfair clients. Besides, each insurance company will install a special counter on its website to help the car owners calculate the amount of the obligatory insurance.

How will the damage be repaid?
For a property damage the minimal sum was fixed at AMD 1.5 mln, while for personal injury - up to 3 mln per head and up to 9 mln for an accident.

Will the law somehow stir up the Armenian insurance market?
Unlike ordinary insurance, which bases on market relations, the obligatory car insurance sets tariffs according to the law adopted in the country. As a rule, the obligatory car insurance is not a profitable kind of insurance. It doesn't mean that insurance companies do not want to get profit. The point is that obligatory insurance helps develop popular trust, thus encouraging for volunteer insurance.

How will exchange of information take place between the Central Bank and Armenian Police?
Insurance companies have been filling in a register in the CBA over the past several years, i.e. any insurance company sends the data to be included in the register within 3 days after an accident takes place. The purpose of the initiative is to consolidate the company's base with that of the CB.

What tendencies can be observed in the Armenian insurance market?
The introduction obligatory car insurance keeps the Armenian market waiting. Insurance companies are developing new projects and establishing branches in the regions.

Hripsime Hayrapetyan / PanARMENIAN News