Georgian
Insurance Law
June
2003
Source: BISNIS Representative, Tbilisi, Georgia
Note:
The legal, regulatory and tax frameworks of most NIS countries, at both federal
and local levels, are in development, with frequent amendments and additions.
Although the material below was in effect at the date posted, BISNIS makes no
representations as to its current status. U.S. companies should be alert to the
possibility of subsequent changes in the laws, regulations and taxes. Also:
Russian to English translations of legislative texts are fraught with pitfalls
due to the challenges of translating specialized terminology. Careful reading
in both languages and consultation with appropriate legal counsel is strongly
recommended prior to business negotiations or contracts.
This
law was passed in 1997 and amended in 1999.
Law of Georgia on Insurance
Chapter
I. General Provisions
Article 1. Relations
Regulated by the Law
1. The present Law regulated
relations in the sphere of insurance between insurance organizations and legal
and natural persons as well as between insurance organizations proper,
establishes basic principles of the state regulation of insurance activity.
2. Relations in the sphere of
insurance are regulated under the Constitution of Georgia, the Civil Code, the
present Law, other Georgian laws and bylaws.
3. Provided an international
treaty or agreement to which Georgia is a party sets rules other than those
specified in this Law, the provisions of the international treaty or agreement
shall prevail.
4. The effect of this Law shall
not apply to the state social and the state compulsory medical insurance.
Article 2. Basic Definitions
Used in the Law
The definitions used in this Law
have the meaning as follows:
a) Insurance is the relations
established for the protection of personal and property interests of natural
and legal persons at the expense of cash funds formed by insurance
contributions (insurance premiums) and other sources allowed under law upon
occurrence of certain circumstances (insurance incident);
b) Insurance activity is the
activity associated with the registration and implementation of insurance and
reinsurance contracts;
c) Insurer is a legal person in
the organizational and legal form of a limited liability or a joint stock
company which has been set up to implement insurance activity an which has
under the provisions of the present Law secured a license to a certain type of
insurance:
d) Policyholder is a natural or
legal person who has signed an insurance contract with an insurer;
e) Insurant is a natural or
legal person for whose benefit the insurance contract has been concluded. The
insurant may concurrently be the policyholder unless otherwise provided by the
insurance contract;
f) Beneficiary is a natural or
legal person who, in compliance with the insurance contract or insurance
legislation, receives the insurance indemnity;
g) Insurance agent is a natural
or legal person who acts on assignment and on behalf of the insurer within the
powers assigned to him/her by the insurer:
h) Insurance broker is a natural
or legal person who, in accordance with the license, carried out intermediary
activities in the sphere of insurance as a type of his/her entrepreneurship
activity;
i) Insurance risk is an event
comprising the features of its occurrence possibility and fortuity and against
which the insurance is taken;
j) Insurance occurrence is an
event upon which occasion the insurance contract provides for the insurance
indemnity payment;
k) Insurance policy is the
insurance or reinsurance contract issued by the insurer representing a document
evidencing the covered insurance and giving the policyholder the right to
demand the insurance indemnity or the sum insured:
l) Reinsurance is an operation
between two insurance companies during which under the insurance (reinsurance)
contract one of the parties undertakes part of the risk instead of payment of
the insurance premium.
Article 3. Concept of
Insurance
1. Insurance is the relations
for the purpose of protection of personal and property interests of natural and
legal persons upon occurrence of a certain circumstance (insurance incident) at
the expense of cash funds formed by the insurance contributions (insurance
premiums) paid by these persons or other sources allowed under Law.
2. Insurance activity is the
insurer's activity associated with the conclusion and implementation of
insurance and reinsurance contracts.
Article 4. Object of
Insurance
1. The object of insurance may
be any property or personal non-property interests which do not contradicts the
legislation of Georgia, including:
a) insurance associated with the
insurant’s life, health, ability to work, pension security and other personal
interests (personal insurance):
b) insurance associated with he
property ownership, alienation and use (property insurance);
c) insurance associated with the
damage incurred to a third (natural or legal) party or his/her property
(liability insurance).
Article 5. Forms of Insurance
1. Insurance is provided in the
form of either mandatory or voluntary insurance.
2. Voluntary insurance is
implemented on the basis of a contract concluded between the insurer and the
policyholder. Types, terms and rules of voluntary insurance implementation are
established under a contract concluded between the insurer and the policyholder.
3. Voluntary insurance is
carried out by any licensed insurance organization of Georgia.
4. Mandatory insurance is such a
form of insurance where an object of insurance, its types and implementation
rules are established under law and are mandatory in concluding the insurance
contract between the insurer and the policyholder.
5. During mandatory insurance
the insurer shall be liable to conclude a contract with the policyholder under
established legislation. The insurer is entitled to offer the policyholder more
advantageous terms than the ones established under law for the latter.
6. Mandatory insurance is
carried out by any licensed insurance organization of Georgia.
Article 6. Results of
Violation of Mandatory Insurance Rules
1. If a person subject to
mandatory insurance on the strength of law is not insured, he has the right to
demand in legal form the implementation of insurance from the insurer who has
assumed liabilities for his insurance.
2. If the policyholder failed to
conclude the insurance contract or concluded it on terms aggravating the
insurant’s situation as compared with the terms established under law, the
policyholder shall be liable upon occurrence of the insurance incident to
compensate to the policyholder the damage in the amount which the policyholder
would have received in the presence of said insurance.
3. The policyholder has the
right to demand in legal form from the insurer the implementation of insurance
pursuant to item 5 of Article 5 of this Law.
Article 7. Activities of Foreign
Natural or Legal Persons in the Sphere of Insurance on the Territory of Georgia
1. A foreign national, a
stateless persons, a legal person established on the territory of Georgia with
the participation of foreign capital, foreign legal person's subsidiary and
representation conducting their activity in Georgia shall implement insurance
in compliance with laws of Georgia.
2. The persons as per item one
of this Article shall have the same rights and liabilities in the sphere of
insurance on the territory of Georgia as Georgian nationals and legal persons.
3. A foreign natural person, a
stateless person, a foreign legal person (including foreign insurance and
reinsurance companies) shall be entitled to a participation in Georgian
insurance and reinsurance companies.
4. Participation of the persons
as per item 3 of this Article in the authorized capital of Georgian insurance
and reinsurance companies shall not exceed 49 per cent in the aggregate.
5. Activities of a foreign
insurance company in Georgia as an immediate insurer shall be prohibited.
6. An insurance company of
Georgia may independently conclude the insurance contract directly with one or
several foreign re-insurers.
7. The implementation of an
insurance broker's functions by a foreign legal person on the territory of
Georgia shall be allowed only to an insurance company of Georgia in the sphere
of reinsurance of its risk assumed abroad. A foreign legal person may carry out
functions of an insurance broker in Georgia through a subsidiary or representation,
which has been registered under established procedure, or directly on the basis
of a contract signed with legal persons of Georgia.
8. An insurance company of
Georgia in connection with the reinsurance of its risk abroad may make direct
use of a foreign broker company's services.
Chapter II. Participants in Insurance
Relations
Article 8. Policyholder
1. Policyholder is a person who
enters into n insurance contract with an insurer.
2. The policyholder may be both
a legal and natural person.
3. The policyholder shall be
free in choosing an insurer in concluding both the voluntary and mandatory
insurance contract.
Article 9. Insurer
1. Insurer is a legal person
established to implement insurance activity having under the provisions of the
present Law received the right to write appropriate insurance. Registration of
the insurer as an organization shall be carried out under the procedure
established in Georgia for registration of a legal person.
2. Insurance company may operate
only as a limited liability company or a joint stock company. Budgetary
organizations are not allowed to found an insurance company and act as founders
of an insurance company.
3. The name of a licensed
insurance company must include the word «insurance».
4. The reorganization or liquidation
of an insurance company shall be effected under law.
5. Insurance companies shall
enjoy equal rights in implementing their activities.
6. The monopoly and any other
activity aimed at the limitation of competition on the definite insurance
market, the provision or gaining advantage by the insurer (insurers) over other
insurer (insurers) shall be prohibited.
Article 10. Insurant
1. Insurant is a person for
whose benefit the insurance contract is concluded. The insurant may
concurrently be the policyholder unless otherwise provided by the insurance
contract.
2. The policyholder may become
liable under the mandatory insurance legislation to insure a third party. In
voluntary insuring the policyholder may indicate a third party in the insurance
contract as the insurant; in such a case the object of insurance will be the
insurance and his/her associated interests (personal insurance) or the
insurant’s property and its associated interests (property insurance).
3. In insuring property, the
insurant who is not the policyholder shall have the property presentation
interest.
4. During mandatory insurance
the third party's consent for conclusion of the contract where he is to be
indicated as the insurant shall not be necessary. During voluntary insurance
the refusal of the party to conclude said contract will lead to the
impossibility of its conclusion or to its alteration or termination if the
contract has been already concluded.
5. In insuring property, the
policyholder shall be liable to inform his intention to a third party, insure
his property or its associated interests with the precise indication of the
objects of insurance.
6. If the policyholder is liable
to insure a third party, the latter may demand from the policyholder the
submission of his liability performance report or a document evidencing
insurance in the cases provided for in law. If the policyholder fails to
perform his liability or performs it improperly with regard to a third party's
insurance, the latter may resort to the rights as provided in items one and two
of Article 6 of the present Law.
7. The implementation of a minor
insurant's rights shall be carried out under the procedure established by law.
8. The conclusion of the
contract in favour of the insurant shall not release the policyholder from
meeting the liabilities under the contract.
9. Insurance of a third party
shall be implemented at the policyholder's expense. Liabilities of the insurant
who is not the policyholder as well as the liabilities of the policyholder
arising upon occurrence of the insurance incident shall be specified under the
insurance contract. The policyholder shall be liable to notify the insurant
about the liabilities as specified under the insurance contract.
10. Should the insurant refuse
from getting the insurance indemnification, which belongs to him under the
insurance contract, the right to the indemnification shall be transferred to
the policyholder.
11. Upon death of the insurant,
unless he is the policyholder, the insurance contract shall be terminated if
the replacement of the insurant is not specified under law or the insurance
contract.
12. Should the insurant's death
be the insurance occurrence provided for in the insurance contract, the
contract shall be terminated upon its completion.
13. Upon death of the insurant,
unless he is the policyholder, and in whose favour the property insurance
contract has been signed, the rights and liabilities of the insurant which are
the object of insurance shall, at the policyholder's consent, be transferred to
the late insurant's heir unless otherwise provided by law and the contract.
14. If the policyholder is
against the replacement of the late insurant, or if the heirs are against
assuming the late insurant's rights and liabilities, the contract shall be
terminated.
Article 11. Beneficiary
1. Beneficiary is a natural or
legal person who, in compliance with the insurance contract or insurance
legislation, receives the insurance indemnification.
2. Beneficiary may be determined
during both the personal and property insurance.
3. Determination of the
beneficiary during mandatory insurance shall take place under legislation
governing the given type of insurance, while the voluntary insurance
beneficiary is determined by the policyholder.
4. The insurant is the beneficiary
unless otherwise provide under mandatory insurance legislation or the insurance
contract.
5. The beneficiary is the
insurant unless the beneficiary is specified in the contract.
6. The property insurance
contract in favor of the beneficiary may be concluded without indication of the
beneficiary's name or title. In concluding such contract the beneficiary shall
be given the insurance certificate (policy, etc.) t bearer. In this case the
beneficiary will be the one who submits said document to the policyholder.
7. If the policyholder is not
the insurant, then upon the death or renouncement of his rights the latter’s
rights shall be transferred to the policyholder with the consequences as per
item 10 of Article 11 of this Law.
8. The conclusion of a contract
in favor of the beneficiary shall nor release the policyholder from performance
of the liabilities under the contract.
Article 12. Insurance Agent
and Insurance Broker
1. The policyholder may
implement insurance activity through insurance agents and insurance brokers.
2. An insurance agent is a legal
or natural person who enters into insurance contracts in the name and on
assignment of the insurer within the powers assigned to him by the insurer.
3. An insurance broker is a
legal or natural person who, in accordance with a license, carried out
intermediary activity in the sphere of insurance as a type of his
entrepreneurship activity.
4. Relations of the insurance
broker with the insurer and the policyholder shall be defined by the contract
concluded between them.
5. The insurer, the insurance
agent or the insurance broker shall not be authorized to enter into insurance
contracts on behalf of a foreign insurance company, except the car owner's
civil liability insurance contract which is used only beyond Georgia.
6.
The insurance broker and insurance agent shall be liable, while concluding the
insurance contract, to notify the insurer about all the circumstances known to
them which are important for the terms specified under the insurance contract
Chapter III. Securing Insurer's Financial
Stability
Article 13. Terms of Securing
Insurer's Financial Stability
The basis for securing the
insurer's financial stability is the availability of the authorized capital,
insurance reserves and the system of reinsurance.
Article 14. Economic Limits
and Standards
1. The insurer and the insurance
broker shall be liable to observe the economic limits established by the state
supervision service as follows:
a) the minimum amount of the
authorized capital (including in cash) in obtaining a license;
b) rules of allocation and
investment of insurance reserves and funds;
c) boundary correlation of
assets and assumed liabilities;
d) boundary correlation of
financial opportunities and own capital.
e) boundary correlation between
the attracted financial means and own capital.
Article 15. Insurance
Reserves and Funds of Insurer
1. For the purpose of fulfilling
the assumed liabilities the insurer shall, on the basis of insurance
contributions, form necessary reserves to indemnify expected insurance
expenses. A list of insurance reserves and funds as well as their forming
procedure shall be specified by the state insurance service of Georgia.
2. Insurance reserves formed by
the insurer shall not be subject to taxation.
3. The rules of allocation and
investment of insurance reserves shall be established by the state insurance
supervision service.
Article 16. Insurer's
Solvency Guarantee
1. In order to safeguard his
solvency, the insurer shall be liable to preserve the standard correlation of
the assets and the insurance liabilities assumed. The methods of determining
the correlation and its standard amount shall be established by the state
insurance supervision service of Georgia.
2. The allocation of insurance
reserves by the insurer shall be carried out on the basis of diversification,
returnability, applicability and liquidity. The necessary correlation during
allocation of reserves shall be determined by the state insurance supervision
service of Georgia.
Article 17. Insurer's
Accounting and Reporting
Indicators and forms of
insurance operations, insurance reports and their submission dates shall be
determined by the state insurance supervision service in accordance with law.
Chapter IV. State Supervision of
Insurance Operations
Article 18. State Insurance
Supervision Body
1. The state supervision over
insurance operations shall be exercised by the state insurance supervision
service of Georgia which is an independent structural division of the executive
power and is financed from the central budget. The purpose of the state
insurance supervision service is: the protection of the Georgian legislation
concerning insurance, the effective development of the insurance services, the
protection of the interests of insurers, policyholders, other concerned persons
and the state.
2. Head of the state insurance
supervision service of Georgia shall be appointed by President of Georgia.
Article 19. Functions of
State Insurance, Supervision Service of Georgia
1. Functions of the state
insurance supervision service of Georgia are as follows: carrying out of the
state policy in the sphere of insurance, protection of consumers’ interests and
rights, ensurance of capability of insurance institutions for which purpose it
shall carry out the following activities:
a) insurance, including
licensing of broker operations in the sphere of insurance:
b) maintenance of the register
of insurers, insurance brokers, non-commercial insurance institutions:
c) establishment of the rules of
forming and allocating insurance reserves and funds;
d) creation of standard and
methodological documents on the matters of insurance activity which, in
accordance with the Law, fall within competence of the state insurance
supervision service of Georgia as well as the explanation of these matters to
insurers, policyholders and other persons at their request;
e) generalization of the
insurance activity practice, drafting of laws and other enactments regulating
insurance relations and making alterations and addenda in the existing ones to
contribute to the development and perfection of insurance activities, concern
for the Georgian market development.
Article 20. Powers of State
Insurance Supervision Service of Georgia
1. The state insurance
supervision service of Georgia shall be empowered:
a) to check observance of
standard and methodological documents by insurers and insurance brokers and the
accuracy of their accounts and reports, for which purpose it will demand and
receive the established accounts and reports;
b) if violations of the insurance
law are discovered in the operations of the insurer, to indicate the measures
of their elimination, and in the case of non-observance of the given
instructions to suspend the license until the revealed violation is eliminated
or make decision on revocation of the license.
Article 21. Licensing of
Insurance Activity
1. Intermediary operations in
the sphere of insurance activity and insurance shall be carried out only
subject to the availability of an appropriate license.
2. The insurance activity license
may be issued only to the legal person whose purpose is insurance and related
activities, a list of which shall be made out by the state insurance
supervision service of Georgia.
3. A license shall be issued for
the execution of personal, property and liability insurance in both the
mandatory and voluntary form as well as for reinsurance provided the object of
the insurer's activity is insurance only, at the same time the license shall
bear indication of the type of insurance to which the insurer is entitled.
4. The insurance activity
license shall be issued to a concrete insurer. Its transfer to other legal
person is not allowed.
5. The license is unlimited and
valid on the whole territory of Georgia.
6. Legal persons shall acquire
the status of the insurer (reinsurer), the insurance broker and the right to
insurance activity only after obtaining a license.
7. Licensing is not necessary
for the insurance agent's activities as well as for the activity associated
with the assessment of insurance risk, extent of damage and the incident
reliability, the consultation and research activity in the sphere of insurance.
8. A license to the insurer
shall be issued on the basis of an application to be supplemented with the
documents as follows:
a) copies of the foundation
documents;
b) a copy of the state
registration document according to which the insurer is a legal person;
c) certificates on the stated
authorized capital;
d) data on company managers;
e) a business plan worked out in
compliance with the standards established by the state supervision service,
terms by types of insurance with insurance contracts (insurance certificates,
policies and insurance tariffs) enclosed.
9. The insurer (applicant) shall
be responsible for accuracy of the documents submitted for licensing.
10.The form of a license shall
be specified by the state insurance supervision service of Georgia.
11. If any alternations are made
in the documents submitted by the insurer (applicant) for licensing, the
insurer shall within 7 days inform so the state insurance supervision service,
enclosing the documents evidencing the alteration made in the above-mentioned
documents.
12.The state insurance
supervision service of Georgia shall publish the data on the insurance company
to which the license has been issued as follows:
a) the company name and legal
address of the insurance institution;
b) the organizational and legal
status of the insurance institution;
c) the license number, date of
issue as well as the type of insurance on which the license has been issued.
Article 22. Term of
Consideration of License Application
The license application shall be
considered by the state insurance supervision service of Georgia within one
month.
Article 23. License Fee
The procedure for payment and
amount of the license fee shall be determined under laws of Georgia.
Article 24. Refusal to Issue
License
1. A license will not be issued
if:
a) the documents submitted for
obtaining a license do not meet the requirements of Article 21 of this Law;
b) a license is requested by the
legal person, who, according to this Law, is not entitled to insurance activity
on the territory of Georgia;
c) in regard to the insurance
institution's manager there is a decision of the court prohibiting his
insurance activity.
2. In the case of refusal to
issue a license the applicant will be provided with the substantiated reply in
writing with indication of the refusal grounds.
3. In the case of refusal to
issue a license the applicant may appeal against the decision.
Article 25. Suspension of
Validity of License
1. The validity of a license
shall be suspended by the state insurance supervision service of Georgia.
2. The license validity
suspension shall entail the prohibition of conclusion by the insurer of any
insurance contract for the license suspension period.
3. The license validity may be
suspended for the period of six months in the cases as follows:
a) for the non-performance of
the instructions concerning the elimination of legislation violations;
b) for non-observance by the
insurer of solvency guarantees specified under law:
c) for conclusion by the insurer
of a mandatory insurance contract on terms which provide the policyholder,
insurant or the beneficiary with the conditions worse than those stipulated in
the mandatory insurance legislation;
d) for conclusion of an illegal
insurance contract;
e) for regular violation or
non-performance by the insurer of the liabilities assumed under the insurance
contract;
f) for refusal to submit the
documents falling within the competence of the state insurance supervision
service of Georgia to the latter;
g) for provision of deliberately
incorrect information by the insurer to the state insurance supervision service
of Georgia;
h) for creation of the
conditions which, according to Article 24 of this Law, would serve as grounds
for refusal to issue a license.
4. The insurer shall be
empowered to apply against the decision made be the state insurance supervision
service concerning the license validity suspension in court.
5. Upon elimination of the
circumstances on which ground the license validity was suspended, the insurer
may address the state insurance supervision service for prior renewal of the
license validity.
6. The above said address shall
be considered in the state insurance supervision service within one month after
its submission, while the decision concerning the prior renewal of the license
validity shall be forwarded to the insurer in writing.
Article 26. License
Withdrawal and Revocation
1. In the case of
non-performance by the insurer of the liabilities within the fixed terms, which
constitutes grounds for termination of a license, the state insurance
supervision service of Georgia shall be entitled to make a decision on a
license withdrawal.
2. From the moment of making a
decision on license withdrawal or revocation the insurer shall not be entitled
to carry out the prohibited insurance activities, except the liabilities
assumed earlier in compliance with the insurance contract, until they are
valid, after which he shall surrender the license within seven days.
Article 27. Results of
Insurance Company's Reorganizations and Making Amendments to Its Charter
1. In reorganizing a legal
person having an insurance activity license, his right to a license shall be
transferred to the tatter's successor in title, at the same time a respective
license shall be issued to the successor in title to replace the former one.
2. The application for license
replacement shall be accompanied with:
a) a decision on the legal
person's reorganization;
b) a copy of the state
registration document of the insurer's successor in title.
3. If amendments are made to the
foundation documents of the legal person which do not require the legal
person's re-registration, the copies of said documents shall be forwarded to
the state insurance supervision service of Georgia.
Article 28. Preservation of
Trade and Insurance Secrets by Officials of the State Insurance Supervision
service of Georgia
1. Any official of the state
insurance supervision service of Georgia shall not be entitled to disclosed in
any form the data constituting the insurer's trade secret as well as the data
on the policyholder, the insurant, the beneficiary which belong to the
insurance secrets and became known to him in the course of his operations, irrespective
of whether the person currently occupies the above-mentioned position or not.
2. In the case of disclosure of
the above secrets, the officials of the state insurance supervision service of
Georgia shall bear responsibility under law.
Article 29. Appeal Against
Decisions of State Insurance Supervision Service of Georgia
Decisions of the state insurance
supervision service of Georgia may be appealed against in court.
Article 30. Advisory Council
at State Insurance Supervision Service of Georgia
An advisory council may be
organized on social principles at the state insurance supervision service of
Georgia comprising representatives of the insurers, representatives of the
policyholders from different sectors of economy, economists engaged in insurance
activity. In making important decisions the state insurance supervision service
of Georgia shall consider the recommendations issued by the advisory council.
Chapter V. Transitional Provisions
Article 32. Concept of
Insurance Contract
1. In accordance with the
insurance contract the policyholder shall be liable to ensure due payment of
the insurance contribution (premium), while the insurer shall be liable upon
the occurrence of an insurance incident to pay out to the policyholder or other
person to whose benefit the insurance contract has been signed the insurance
indemnity (benefit).
2. In agreement with the parties
the insurance contract may also contain other conditions.
Article 33. Form of Insurance
Contract
1. An insurance contract shall
be concluded in writing in the forms as listed below:
a) by drawing up one document by
the parties:
b) by merger of the policyholder
with standard conditions independently worked out by the insurer (merger
contract);
c) by transfer of the insurance
certificate (policy, etc.) by the insurer to the policyholder;
d) by other procedure enabling
documentary attestation of the parties' willingness to conclude a contract and
the consent thereof to all the contractual conditions.
2. The contract's form shall be
determined by the insurer or in agreement with the parties.
Article 34. Contents of
Insurance Contract
1. Insurance contract or policy
must include:
a) the name of the document:
b) the name of the insurer, his
legal address and bank requisites;
c) the name or title of the
policyholder, his address;
d) the indication of the object
of insurance:
e) the definition of the
insurance risk;
f) the amount of the sum
insured;
g) the amount, payment rules and
terms of insurant payments (premiums);
h) the data on the insurant or the
policyholder provided they participate in the contract;
i) the duration of the contract;
j) rules of amendment or
evocation of the contract.
2. In agreement of the parties
the contract may include other conditions as well.
3. If the insurance contract
provides for the policyholder the conditions worse than those as established
under legislation, the conditions as established under legislation shall
prevail.
Article 35. Validity of
Insurance Contract
1. Insurance contract shall be
valid from the date of payment of the insurance premium, or from he date of
payment of the first insurance premium in the case of the deferred payment,
unless the legislation or the contract provide otherwise.
2. The insurance contract
validity shall cease upon occurrence of the first insurance incident from the
date of full payment of the insurance premium, unless the contract or
legislation provides otherwise.
3. The insurance territory shall
coincide with the territory of Georgia, unless the nature of the object of
insurance or the contract provides otherwise.
Article 36. Insurer’s
Liabilities
1. Insurer shall be liable:
a) to acquaint the policyholder
with terms of the insurance contract (policy);
b) upon occurrence of an
insurance incident, to make insurance payment as per item 3 of Article 40 of
the present Law;
c) to reimburse to the insurant
expenses within the sum insured which the latter undertook to avoid or lessen
damage to the insurant’s property if these expenses were necessary and were
covered in agreement with the insurer, irrespective of whether the expenses
yielded any result or not; at the same time, the expenses must not exceed the
extent of the inflicted damage. The insurer shall be released from payment of
the insurance benefit in the part of damage caused by deliberate non-taking of
measures for lessening the consequences of the insurance incident;
d) not to furnish data obtained
as a result of insurance concerning the policyholder, the insurant or the
beneficiary, their health and material status. This information may only be
furnished to the policyholder, the insurant or the beneficiary, or to judicial,
investigation bodies and taxation services at the court’s decision.
2. Other obligations of the
insurer might be envisaged by the insurance agreement as well.
Article 37. Policyholder’s
Liabilities
1. Policyholder shall be liable:
a) to make insurance payments as
per item 3 of Article 39 of he present Law;
b) in concluding the insurance
contract, to inform the insurer about all known to him circumstances being of
significance during the occurrence of an insurance incident and for the
assessment of the probability of damage resulting from the incident as well as
about the risk increase, following the contract’s conclusion:
c) to take measures for the
salvage and preservation of the property, notify the insurer within fixed dates
in an established form on the insurance incident and safeguard the realization
of the right of recourse against the person responsible for damage, while
insuring property;
d) in coinsuring the property,
to inform the insurer about other insurance contract’s action to this object.
2. The insurance contract may
provide for other insurance liabilities as well.
Article 38. Insurance
Occurrence
1. Insurance occurrence is an
event upon which occasion the insurant contract provides for payment of the
insurance benefit.
2. In mandatory insuring, types
of the insurance occurrence are defined pursuant to the insurance legislation,
or in agreement with the parties in the case of voluntary insurance.
3. The event considered as the
insurance occurrence must include the signs of possibility and fortuity.
4. Justification of the
insurance occurrence and damage resulting from this occurrence shall be
assigned to the insurer.
Article 39. Insurance Premium
1. Insurance premium is the sum
for insurance to be paid by the policyholder to the insurer.
2. The insurance premium payment
liability may not be assigned either by legislation or the contract to the
insurant, unless he is the policyholder, or during mandatory insurance of the
beneficiary the insurance premium my not be in excess of the sum as established
by Law.
3. The amount of the insurance
premium, rules and term of payment during voluntary insurance shall be
specified by the contract, or under legislation in the case of mandatory
insurance.
4. In defining the insurance
premium, the parties may make the use of the insurance tariffs as worked up by
the insurer to determined the amount of the benefit being calculated as the
determined amount per unit of the sum insured with regard for the nature of the
object of insurance and the insurance risk.
5. The contract may provide for
deferred payment of the insurance premium.
6. Non-payment of the insurance
premium at fixed dates shall entail the termination of the contract, unless the
contract provides otherwise.
7. The insurance premium
represents operational expenses for entrepreneurs and is ascribed to the cost
price, while in regard to non-entrepreneurs it will be excluded from the taxed
sum.
Article 40. Sum Insured and
Insurance Benefit
1. Sum insured is the sum of
money defined by the insurance contract and representing, in accordance with
legislation, the marginal rate of the insurer's liability upon occasion of an
insurance occurrence on the basis of which the insurance premium and the
insurance benefit are defined.
2. Insurance benefit is the
indemnification within the limits of the sum insured to be paid by the insurer
upon occasion of an insurance occurrence to the benefit of the policyholder.
3. The extent of the sum insured
and the insurance benefit shall be defined under the contract and may not be
less than the amount as established by law in he case of mandatory insurance.
4. The rules and term of payment
of the insurance benefit shall be defined under the contract.
5. In insuring property, the sum
insured shall not exceed the cost of the property (insurance value) when the
contract is concluded. The parties may not enter into an argument with regard
to the cost of insurable property as defined by the contract, except the cases
where the insurer justifies that he was led into error by the policyholder. If
the sum insured as established by the contract exceeds the cost of insured
property, the insurance contract shall be void in the part of the sum insured
by which it exceeds the cost of property at the moment of conclusion of the
insurance contract.
6. In insuring property or
liability, the insurance benefit shall not exceed the extent of the actual
damage to the policyholder (the insurant) resulting from the insurance
occurrence.
7. If the sum insured is less
than the cost of insurable property, the insurance benefit shall be reduced
proportionally to the ratio of the cost of insurable property to its insurance
value, unless the insurance contract provides otherwise.
8. The property insurance
contract may provide for the replacement of the insurance benefit with
(complete or partial) compensation for damage in kind at decision of the
insurer (within the insurance benefit) or the compensation for damage in kind,
in general.
9. In personal insuring, the
insurance sum shall be defined by mutual agreement of the policyholder and the
insurer. In personal insuring, the policyholder (insurant, beneficiary) shall
be paid the insurance benefit, irrespective of whether he is entitled to the
sum under social insurance, other insurance contract or the procedure for
compensation for damage or not.
Article 41. Rules and Terms
of Insurance Benefit Payment
1. The insurer shall pay the
insurance benefit in accordance with the contract or law. Grounds for making
the insurance benefit payment decision shall be the policyholder's application
and the official survey (survey report), unless the contract or law provides
otherwise. The official survey shall be drawn up by the insurer or his
assignee. If necessary, the insurer shall be authorized to demand data
associated with the insurance occurrence from law-enforcement bodies, medical
institutions and other establishments, enterprises and organizations who
possess the information concerning the insurance occurrence circumstances. The
insurer shall also be authorized to independently clear out causes and
circumstances of the insurance occurrences.
2. Enterprises, establishments
and organizations shall be liable to provide the insurer with the data related
to the insurance occurrence at request of the latter, including the data which
constitute a trade secret; at the same time, the insurer shall be held
responsible for disclosing in any form this secret, except the cases as provided
for by law.
3. The insurer shall be liable
to ensure payment of the insurance benefit in the time stipulated in the
contract upon occasion of the insurance occurrence.
Article 42. Refusal to Pay
Insurance Benefit
1. The insurer shall be
empowered to refuse complete or partial payment of the insurance benefit to the
policyholder, if the insurance incident occurred:
a) through action of the
policyholder, the insurant, the beneficiary which facilitated the occurrence of
an insurance incident, with the exception of the action effected in the
circumstances excluding liability;
b) through action of the
policyholder, the insurant, the beneficiary which by court's decision were
regarded as a deliberate crime or administrative offense and which is in the
cause-and-effect relation with the insurance occurrence:
c) through military operations
and related military events recognized as such by law, unless the contract
provides for insurance against war risks.
2. The insurer may also refuse
to pay the insurance benefit:
a) if the policyholder provided
the insurer with false data on the object of insurance, the insurance
occurrence and the circumstances thereof:
b) if the policyholder
deliberately did not take measures upon occurrence of the insurance incident
for salvage of the object of insurance:
c) if, in insuring property, the
corresponding damage was compensated to the policyholder by the persons
responsible for the damage;
d) if the policyholder offered
resistance to the insurer in clearing up circumstances of the insurance
occurrence and in determination of the extent of damage incurred to the object
of insurance by the insurance occurrence;
e) in the cases as prescribed by
item 2 of Article 43 of the present Law;
f) in other cases provided for
in Law.
3. The insurer's release from
payment of the insurance benefit to the policyholder on the grounds of illegal
action of the latter, as specified in the Law, shall concurrently release the
insurer from payment of the insurance benefit to the insurant or the
beneficiary.
4. The insurance contract may
provide for other conditions of refusal to pay the insurance benefit as well,
unless they contradict law.
5. A decision to refuse to pay
the insurance benefit shall be made by the insurer who shall notify the
policyholder in writing about the grounds of the refusal with substantiated
reasons.
6. The insurer's refusal to pay
the insurance benefit may be appealed against in court.
Article 43. Right of Recourse
1. The insurer, who during the
property insurance paid the insurance benefit, shall have the right of recourse
against the person responsible for damage within the insurance benefit. The
policyholder (insurant) shall be liable upon receipt of the insurance benefit
to transfer all the documents available to him which are necessary for
implementing this claim.
2. The policyholder's
abandonment of the claims and rights of the person responsible for damage which
ensure meeting of the claims to him as well as refusal to provide the insurer
with the documents required for applying to the right of recourse shall release
the insurer from payment of the insurance benefit in the amount which he might
have received from the person responsible for damage by way of recourse. The
transfer of this right to the insurer may be specified in the insurance
contract.
3. The policyholder shall be
authorized to assign the right of recourse against the person responsible for
damage to the insurer in excess of the insurance benefit as well as transfer
other rights against the person. The transfer of this right to the insurer may
be specified in the insurance contract.
4. The policyholder may, upon
occurrence of the insurance incident, by permission of the insurer transfer to
the latter his rights to the insured property and receive the indemnity in the
full amount of the sum insured.
Article 44. Termination of
Insurance Contract
1. In addition to instances
specified under the Civil Code, an insurance contract will also terminate, if:
a) the contractor's term has
expired;
b) the insurer has complied with
the liabilities assumed under contract towards the policyholder in full:
c) the insurance object's
existence has ceased;
d) the insurant, who is not the
policyholder, has died, unless he was replaced;
e) the policyholder has failed
to pay the full insurance premium or the next insurance premium in due time,
unless the contract provides otherwise;
f) the policyholder has
alienated the object of insurance because the insurer refused the
policyholder's replacement, while the contract or legislation does not provide
otherwise;
g) the insurance contract has
been recognized as void by court;
h) the insurer has gone
bankrupt.
2. The insurance contract may be
terminated before time at request of the policyholder or the insurer if
provided for in the contract.
3. The parties shall notify each
other about their intent to terminate the insurance contract before time in
advance of 30 days at least, unless the contract provides otherwise.
4. In the case of termination of
the insurance contract before time at request of the policyholder, the insurer
shall return to the policyholder the paid-in insurance premiums, less the
overhead expenses already born by the insurer. If the termination of the
insurance contract results from violation of the insurance contract provisions,
the insurer shall return the paid-in insurance premium in full.
5. In the case of termination of
the insurance contract before time at request of the insurer, the insurer shall
be obliged to return to the policyholder the paid-in insurance premiums born
him in full, less the expenses born. If the policyholder's demand for
terminating the insurance contact is stipulated by the insurer's violation of
the insurance contract, the insurer's violation of the insurance contract, the
insurer shall return the insurance premiums of the corresponding remaining
insurance time, less the expenses born.
Article 45. Void of Insurance
Contract
1. In addition to general
principles of void of transactions stipulated in the Civil Code, an insurance
contract will be void from the date of its conclusion, if:
a) in concluding the contract,
the object of insurance did not exist:
b) the object of insurance is
the illegal interest of the policyholder;
c) the object of insurance is
the property which is subject to seizure on he basis of the respective, lawful
and effective decision of the court;
d) the object of insurance is
the property acquired in he criminal way, or which is being used for criminal
activity;
e) the insurance occurrence is
an event which occasion is devoid of the signs of possibility or fortuity (item
3 of Article 38 of this Law) and which occasion is objective and inevitable of
which the parties or the policyholder - in the worst - were aware beforehand;
f) in concluding the agreement,
the policyholder was guided by the principle of deriving illegal profit;
g) the insurance contract was
concluded after the insurance occurrence.
Article 46. Replacement of
Policyholder
1. Upon the death of the
policyholder who concluded the property insurance contract, his rights and
liabilities shall be transferred to the persons inheriting the property. In
other cases of the property transfer, the rights and liabilities of the
policyholder will transfer to a new owner, unless the contract or legislation
provides otherwise.
2. Upon the death of the
policyholder who concluded the personal insurance contract to the benefit of
the insurant, the rights and liabilities stipulated in the contract shall be
transferred to he insurant with the tatter's consent.
3. If during the contract's
validity the policyholder is declared insolvent by court, his rights and
liabilities shall be transferred to his trustee, concurrently the liability
insurance for the third party shall be terminated as soon as the citizen is
declared insolvent.
4. In reorganizing the
policyholder as a legal person within the insurance contract's validity, his
rights and liabilities shall, with the insurer's consent, be transferred to the
respective successor in title under the procedure established by law.
Article 47. Replacement of Insurant
1. In insuring civil liability,
where insured is liability of the person who is not the policyholder, the
policyholder may at any time prior to the insurance occurrence replace the
insurant with other person. The insurer shall be notified thereupon, unless the
contract provides otherwise.
2. The insurer, who is not the
policyholder and who is indicated in the personal or property insurance
contract, may be replaced with other person only subject to the insurant’s and
the policyholder’s consent.
3. If the third party's
insurance proceeds from the mandatory insurance legislation, the replacement of
the insurant shall be effected under the procedure established by said
legislation and the legislation-based contract.
Article 48. Replacement of
Beneficiary
1. The policyholder shall, at
the insurant’s request, be authorized on the basis of the advance written
notification at any time prior to the occasion of an insurance occurrence to
replace with another person the indicated in the insurance contract beneficiary,
who is not the policyholder.
2. The policyholder may not be
replaced with another person after fulfilling certain liabilities as stipulated
in the insurance contract existing between the insurant and the beneficiary as
well as after the beneficiary has lodged an insurance claim to the insurer.
Article 49. Double
(Multilateral) Insurance
1. Double insurance is insurance
of one and the same object with one or several insurers, where the total amount
of the sum insured exceeds the insurance value.
2. In the case of double
property insurance, both insurers shall pay out to the policyholder the
insurance benefit pursuant to the contract concluded with him, however the
total amount of the insurance benefit to be received by the policyholder from
both insurers shall not exceed the actual damage.
3. The policyholder shall be
authorized to receive within the extent of the sum insured as stipulated in the
contact concluded with the insurer the insurance benefit from any insurer.
Where the received insurance benefit does not cover the actual damage, the
policyholder shall be authorized to receive the remaining sum from another
insurer.
4. The insurer, who is
completely or partially released from payment of the insurance benefit for the
reason that the damage has been compensated by other insurer, shall be obliged
at request of the policyholder to return to the latter the corresponding part
of the insurance premiums, less the expenses born.
5. In the case of double
insurance of one and the same object of insurance with different insurers, the
insurance liability upon occurrence of an insurance incident shall be assigned
to the insurer whose contract covers the occurred insurance incident.
6. In the case of double
personal insurance, each insurer shall, independently from one another, perform
his insurance liability before the policyholder, irrespective of the fact that
other insurers also perform the same liability.
Article 50. Collective
Insurance
1. In the case of collective
insurance, one contract covers several insurants.
2. Collective insurance may be
either personal or property, personalized or depersonalized, and cover a
certain category of persons.
3. In he case of depersonalized
insurance, the circle of policyholders shall be so concretized in the insurance
contact as may be necessary for individualization of the insurance occurrence
and establishment of the consequences thereof.
4. A collective insurance
employer may insure his employees only on the basis of a personal insurance
contract.
Article 51. Coinsurance
1. The object of insurance may
be insured by several insurers under one contract (coinsurance). At the same
time, the contract must indicate the rights and liabilities of all the insurers
according to their share in the insured risk.
2. Coinsurers may enter into a
contract pursuant to which one of them - the leader of coinsurers - shall
represent all the coinsurers in relations with the policyholders. At the same
time, the leader of coinsurers shall be responsible for insurance only within
his share.
Article 52. Insurance Unions
and Partnerships
1. Insurers may establish unions
(associations) with the purpose of coordination of the activities thereof,
protection of their members’ interests and accomplishment of joint programmes,
unless it contradicts legislation.
2. Unions of insurers are public
organizations and are not authorized to directly carry out insurance activity.
3. Following the state
registration of unions, they shall notify so to the State insurance supervision
service of Georgia.
4. Insurers may set up
contractual associations (partnerships) which are not legal persons and operate
on the basis of joint liability of the contractual association members in
accordance with the liabilities assumed under the contract.
Article 53. Reinsurance
1. Insurer has the right for
complete or partial performance of his liabilities towards the policyholder,
for ensuring the risk cover from other insurers (reinsurers) by means of
reinsurance.
2. Insurer, despite the
concluded reinsurance contract, is responsible before he policyholder with the
whole extent of the insurance contract.
3. Terms of reinsurance are
defined under the contract concluded between the insurer and the reinsurer. The
reinsurance contract shall meet the requirements associated with the insurance
contract which are stipulated in this Law.
4. The reinsurance of risk, both
in Georgia and foreign insurance institutions, is possible under the
Law-established procedure.
5. Per the purpose of
organization of reinsurance, insurers may, on the basis of joint activity
contract, unite into reinsurance partnership.
6. The reinsurance of risks in
possible with both the Georgian and foreign insurers (reinsurers) under the
Law-established procedure.
Article 54. Consideration of
Disputes Arising from Insurance Contract
All disputes concerning the
insurance contract or arising from it shall be considered by court in
accordance with the procedure established under Law.
Chapter VI. Final Provisions
Article 56. List of Invalid
Acts
1. Upon the entry into force of
this Law the following legislation become invalid:
a) Georgian Code of Civil
Proceedings, 2-nd part of Article 193, 4-th of Article 195 and Chapter 32
(Bulletin of the Georgian SSR Supreme Soviet, Art. 662, No. 36, 1964);
b) Resolution of the Cabinet of
Ministers of the Republic of Georgia "On Mandatory Insurance of
Passengers", No. 747, 20 October 1993;
c) Resolution of the Cabinet of
Ministers of the Republic of Georgia "On Mandatory Insurance from
Industrial Accidents of Factory and Office Workers at the Expense of
Enterprises and Organizations (Except Budgetary 0nes)», No.941, 27 December
1993;
d) Resolution of the Cabinet of
Ministers of the Republic of Georgia "On Introduction of State Mandatory
Insurance of the Property of the State Enterprises, Associations and
Organizations", No. 154, 16 March 1994;
e) Resolution of the Cabinet of
Ministers of the Republic of Georgia "On Introduction of Mandatory
Insurance of Agricultural Crops"), No.523, 26 August 1995;
f) Resolution of the Cabinet of
Ministers of the Republic of Georgia "On Launching a Campaign for
Registration for Registration of the Population of Georgia, Foreign Nationals
and Stateless Persons Permanently Residing in Georgia and Issuing to them
Identify Cards, Residence Certificates and Georgian Passports to Travel Abroad,
Accordingly", paragraph 12, No. 512, 5 August 1994.
2. Upon the entry into force of
the present Law all legal acts or part thereof shall be invalid.
Article 57. Entry into Force
of Law
This Law shall enter into force
upon its promulgation.
This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)