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Mandatory Auto Insurance in Armenia To Start in 2007

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  • Mandatory Auto Insurance in Armenia To Start in 2007

    PREPARATORY WORK ON INTRODUCTION OF COMPULSORY AUTO INSURANCE IN
    ARMENIA TO START IN 2007

    YEREVAN, APRIL 7, NOYAN TAPAN. It is envisged to start in 2007 the
    preparatory work on introduction of compulsory auto insurance - civil
    liability of the owners of transport means with respect to third
    persons - in Armenia. Levon Mamikonian, Director General of Cascade
    Insurance CJSC, told NT correspondent about it. According to him, this
    practice is common in many countries, thanks to which in particular
    the expenses to compensate for the harm caused to health of those who
    suffered as a result of a car accident are transferred from the budget
    to the private sector. Besides, in a number of countries, the state
    insures some groups of state employees and their civil liability by
    using budget resources (state compulsory insurance). L. Mimikonian
    said that the work on introduction of various types of compulsory
    insurance first of all presupposes improving the financial stability
    of insurance companies, enhancement of their technical capacities and
    transparency of their activities.

    Starting January 1, 2008, the authorized capital of an insurance
    company must make at least 500 mln drams (about 1.1 mln USD). It was
    noted that prior to the introduction of compulsory auto insurance, a
    body to regulate the process of insurance claims should be set up, as
    it is expected that after auto insurance is made compulsory, the
    number of road accident registerted will increase 2-3fold. According
    to L. Mamikonian, the development of the insurance market in many CIS
    countries is conditioned by the introduction of compulsory insurance
    services. By making use of compulsory insurance services and receiving
    compensations, people started to understand the necessity and
    advantage of insurance, after which various types of voluntary
    insurance also began to produce results. For example, 37 types of
    compulsory insurance are used in Russia. A few years ago they
    accounted for 75% of insurance payments on the Russian insurance
    market. L. Mamikonian noted that out of 22 licensed Armenian insurance
    companies, only 10-12 are operating actively. An average annul growth
    of 30% was registered on the insurance service market over the last
    3-4 years, although recently the growth has slowed down. In 2003, the
    market volume made 4 mln USD, in 2004 - 7 mln USD, while in 2005 -
    7.5-8 mln USD (according to preliminary data).
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