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Health Insurance System In Georgia Teona Teteloshvili Aldagi BCI June 2013

Health Insurance System In Georgia Teona Teteloshvili Aldagi BCI June 2013. EXECUTIVE SUMMARY. 1. GEORGIAN ECONOMY TODAY. 2. INSURANCE MARKET IN GEORGIA. 3. ALDAGI BCI - INSURANCE MARKET LEADER . 4. FEDERAL/STATE HEALTH INSURANCE PROGRAMS. 5. FEDERAL/STATE HEALTH INSURANCE PROGRAMS

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Health Insurance System In Georgia Teona Teteloshvili Aldagi BCI June 2013

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  1. Health Insurance System In GeorgiaTeona TeteloshviliAldagi BCIJune 2013

  2. EXECUTIVE SUMMARY 1 GEORGIAN ECONOMY TODAY 2 INSURANCE MARKET IN GEORGIA 3 ALDAGI BCI - INSURANCE MARKET LEADER 4 FEDERAL/STATE HEALTH INSURANCE PROGRAMS 5 FEDERAL/STATE HEALTH INSURANCE PROGRAMS AND THEIR INFLUENCE ON INSURANCE COMPANY BUSINESS 6 FUTURE OF THE HEALTH INSURANCE IN GEORGIA

  3. GEORGIAN ECONOMY TODAY 2012 Estimated Real GDP Growth Rate for the Selected Countries * *Source: IMF, World Economic Outlook (2012 April data)

  4. INSURANCE MARKET IN GEORGIA DENSITY & PENETRATION • Nascent state of Georgian insurance sector translates into extremely low insurance penetration and density levels • Market research reports reveal that majority of population does not have adequate perception of property & personal risks, thus is reluctant to pay money for risk minimization EXCLUDING GOVERNMENTAL PROJECTS IN GEORGIA : DENSITY USD 22.4 PENETRATION 0.9%

  5. INSURANCE MARKET IN GEORGIAIN GEORGIA PREMIUMS BY YEAR & MARKET SHARE OF INSURANCE COMPANIES INSURANCE MARKET (9 months) GROSS WRITTEN PREMIUM AMOUNTS IN '000 GEL Y-o-Y GROWTH 74.9% 14 INSURANCE COMPANIES ON THE MARKET 5 LARGEST INSURANCE COMPANIES HOLD MORE THAN 79%OF THE MARKET INSURANCE COMPANIES BY GPW, 9 MONTHS 2012 SOURCE: NBG – National Bank of Georgia 30%

  6. GEORGIAN INSURANCE MARKET BY PRODUCT ANALYSES Y-o-Y +106.9% Y-o-Y +3% SOURCE: NBG – National Bank of Georgia

  7. HEALTH CARE MARKET IN GEORGIA TOTAL HEALTH CARE EXPENDITURES CIS COUNTRIES COMPARISON Y2009 SOURCE: WHO. World Health Statistics 2010 Georgia has one of the highest rate of Health Care expenditure as % of GDP, among other low income countries On the other hand, the share of Governmental expenditure in total Health Care sector is the lowest inGeorgia among European countries

  8. ALDAGI BCI – THE LEADER ON THE INSURANCE MARKET BRIEF INFO ABOUT ALDAGI BCI ALDAGI BCI KEY DATES ACQUISITION OF INSURANCE COMPANY IMEDI L 2012 • FIRST INSURANCE COMPANY ON THE MARKET – SINCE 1990 ACQUISITION OF INSURANCE COMP. PARTNER 2011 ACQUISITION OF BLOCK GEORGIA ASSETS • VENTURE OF 6 INSURANCE COMPANIES 2010 ABCI - MEMBER OF BANK OF GEORGIA GROUP • WIDEST DISTRIBUTION CHANNEL 2009 • UNDISPUTED LEADER ON THE MARKET* • By Revenue – 32%Market Share • By U/W Profit – 45%Market Share • By ASSETS – 37%Market Share • * Figures for 9 months of 2012 2008 ALDAGI BCI ENTERS INTO HEALTH CARE BUSINESS 2007 ACQUISITION OF ALDAGI BY BCI 2006 ACQUISITION OF EUROPACE BY BCI 2005 ACQUISITION OF SALBI BY ALDAGI ACQUISITION OF BCI BY BANK OF GEORGIA 2004

  9. ALDAGI BCI – THE LEADER ON THE INSURANCE MARKET INTEGRATED BUSINESS MODEL INSURANCE HEALTHCARE • The first managed healthcare provider since 2006 • The largest managed chain of clinics • A chain of 26 hospitals with a concentration in Western Georgia, covering approximately 40% of Georgia’s population • 40% of ABCI claims expense become revenue of its own healthcare business • Gross Profit Margin 40.6% • EBITDA Margin 22.4% • Market leading life and non-life insurance provider. 9 months of 2012 market shares of 30% Gross Premiums Written; 32% by Revenue • More than 607,000 corporate & retail clients; • Widest distribution channel • 99% of brand recognition • Largest insurer of property & casualty risk • Largest Banc assurance network in the country • Capable management team with strong acquisition & integration track record

  10. ALDAGI BCI – THE LEADER ON THE INSURANCE MARKET ALDAGI BCI BUSINESS DEVELOPMENT DYNAMICS ALDAGI BCI TRENDS BY LINES GROSS WRITTEN PREMIUM AMOUNTS IN '000 GEL (1.62 GEL ~ 1 USD) (3 Quarters of 2012 and 2011) SOURCE: NBG – National Bank of Georgia

  11. ALDAGI BCI – THE LEADER ON THE INSURANCE MARKET ALDAGI BCI IN HEALTHCARE INDUSTRY • ABCI ENTERED INTO HEALTH CARE BUSINESS IN 2006 • Till 2010 Operated with 5 small outpatient Clinics • IN 2010 Invested 15 mln USD in Building 5 small sized and 1 middle sized hospitals • In YE 2011 acquired Hospital Assets -11 Operating hospitals - from the largest health care Company ABCI HEALTH CARE CHAIN – IS THE LARGEST IN THE COUNTRY 26 HOSPITALS 1,120 BEDS 80% OF THE MARKET SHARE IN WESTERN GEORGIA COVERED POPULATION – 1,800,000 AS A RESULT IN 2012 By Acquisition of Imedi L, ABCI added to its hospital Chain 6 New Hospitals and 4 Under construction * includes 4 small outpatient clinics

  12. FEDERAL/STATE HEALTH INSURANCE PROGRAMS HISTORY • In 1992 year free of charge healthcare system was abolished and till 1995 year was only out of pocket payment, what caused increase of morbidity, mortality • In 1995 year Insurance Fund was created. From Insurance Fund was covering only: • Socially Dangerous Diseases – tuberculosis, HIV etc. • Children from 0 till 1 years of age • Pregnancy Monitoring • Urgent hospitalization and treatment of Veterans and Socially Unprotected People BUT, funds were insufficient and recourses were enough only for 20% of medical cases

  13. FEDERAL/STATE HEALTH INSURANCE PROGRAMS HISTORY In 2007 State Insurance Pilot program was launched which covered only People Under the Poverty Line. This program is operating till now but with some corrections. • WAS: • State was in the role of Insurer • Any Insurance company has right to take part in this project • Beneficiaries were granted with Insurance Vouchers and they have ability to choose in which Insurance Company they want to be Insured • Number of Insured In 2007 year - 196 000 • NOW: • State is in the role of Insurer • Any Insurance Company has right to take part in this tender and choose region where he wants to operate • Country was divided into 26 conditional regions and Beneficiaries were obligated to choose concrete Insurance Company which won tender in concrete region • Number of Insured – 806 066

  14. FEDERAL/STATE HEALTH INSURANCE PROGRAMS HISTORY From 2007 simultaneously with State Insurance for People Under the Poverty Linewere launched other projects, where State was in the role of Insurer also. • Teachers State Program • Tbilisi City hall Program • Vulnerable Children Program • Refugees State program • “Cheap Insurance” Also, for people who were not eligible for above mentioned programs, State has special programs, which covered Oncology diseases, Infectious Diseases and etc. In 2008 nongovernmental Health Insurance Mediation Institute was launched. Role of this institute was to help beneficiaries arrange relation with Insurance Companies

  15. FEDERAL/STATE HEALTH INSURANCE PROGRAMS HISTORY In September, 2012 State launched second global program for Children and pension age adults. • State is in the role of Insurer also • In the range of this program were Insured: Children from 0 till 6 year of age and pension age people - Women from 60 years of age and Men from 65 years of age • Any Insurance Company has right to take part in this tender and choose region where he wants to operate • Country was divided into 26 conditional regions and Beneficiaries were obligated to choose concrete Insurance Company which won tender in concrete region • Number of Insured: Children – 251 600, Pension age – 546 996 After this project was launched all other programs were cancelled, except Tbilisi City Hall program and Under the Poverty line program

  16. FEDERAL/STATE HEALTH INSURANCE PROGRAMS Coverage Both State insurance Programs Cover the same list of Services • Urgent Ambulatory Fully • Urgent Hospital Service Fully • Planned hospital service, Oncology and Cardiology • Planned Ambulatory service with very limited list of services • Medicines with very limited list • Delivery (only for Under the Poverty Line Program)

  17. FEDERAL/STATE HEALTH INSURANCE PROGRAMS GENERAL HEALTH INSURANCE PROGRAM In March, 2013 State launched third global Project “General Health Insurance Program”. • In the range of this programwere Insured people who where not eligible for other State Projects and who do not have private Insurance policy. • Beneficiaries should apply service centers and take policy • Insurance Companies are not involved in this project, State has direct calculation with Hospitals. Insurance companies are only obliged to send monthly renewed policyholders data base. • “General Health Insurance Program” covers only Urgent Ambulatory and Hospital Services

  18. FEDERAL/STATE HEALTH INSURANCE PROGRAMS INFLUENCE ON INSURANCE COMPANY Under the Poverty Line Program Children and Pension Age Adults Program • SHOCK caused by Significant Increase of health insured number • Necessity of new service centers and units what caused increase of administration costs • Expansion of Providers network • Obligation of involvement In healthcare system • No impact on Insurance Company Corporate and Retail Business business • Already ready for Increased number of Health Insured Number • NO Necessity of new service centers and units • Already Expanded Providers network • Already involved In healthcare system • Insignificant impact on Insurance Company Corporate and Retail Business business

  19. FEDERAL/STATE HEALTH INSURANCE PROGRAMS INFLUENCE ON INSURANCE COMPANY General Health Insurance Program • Does not decrease number of insured because it covered only people who where not eligible for other State Program and who do not have private Insurance policy. • Insurance Company itself is not involved in this program, but this program increase revenue of our second business, healthcare system • Does not decrease number of insured because it covered only Urgent Ambulatory and Hospital Services

  20. FEDERAL/STATE HEALTH INSURANCE PROGRAMS State Insurance Policyholders Number and Total Number of Policyholders in Georgia

  21. FUTURE OF THE HEALTH INSURANCE IN GEORGIA • As we see, in Georgia we do not have Mandatory Health Insurance, we have only Federal/State programs covering definite groups of people. • As we know changes are planned, but it is not yet known what projects will be launched. • Insurance Companies will be involved or not in this projects. • Existed programswill continue or not BUT As the leading company of the Georgia’s Insurance market, Aldagi BCI is ready for challenges and we are sure , we will deal with them and adapt quickly.

  22. THANK YOU FOR YOUR ATTENTION TIME FOR QUESTIONS & ANSWERS

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