Economic Challenges Hindering Growth of Armenia Insurance Industry: Ken Research
Economic Environment of Armenia
Armenia was earlier part of Soviet unions before it disintegrated in 1991. After this collapse of Soviet Union, Armenian-Azerbaijani war broke down which adversely affected Armenian economy. Currently, Armenia is a Eurasian nation with its territory spread over both Asia and Europe. Economy relies on all primary, secondary and tertiary sector for its growth. Looking at its economy, Armenia is perhaps one of the poorest nations of Europe. The country is facing serious economic and social challenges. Massive unemployment, corruption, red tapism, etc. are some of the economic challenges faced by Armenia. Further, slowdown in European Union has led to critical economic complications. Even though economy is growing at a positive rate, these challenges must be taken into account. Further, looking at the demographic profile of Armenia, dependent population in the country, specially aged population is increasing.
Brief Overview of the insurance industry of Armenia
Armenia does not have a compulsory insurance system. Insurance market, though expanding but the pace of expansion is extremely slow. The following factors are hindering the growth of the insurance industry in Armenia:
Sluggish economic growth and serious economic challenges
Non-compulsory insurance scheme
Limited product variety
Absence of life insurance policies
Restraints on foreign investments which is limiting full growth of sector
Lack of government institutionalisation
Although market is expanding but it is still weak and require certain improvements. Some of the recent trends seen in the insurance market of Armenia are:
Despite economic challenges, limited product variety and an absence of life insurance, the industry posted a review-period CAGR of 40.0%.
In December 2015, the Armenian Motor Insurers' Bureau formally applied to join the Green Card International Motor Insurance System. Over the forecast period, the system is expected to benefit motorists by proving insurance cover for the victims of road traffic accidents outside Armenia.
In 2014, a government decision to take part of mandatory health insurance premiums paid by state employees affected private health insurers, which had already established health infrastructure such as clinics and medical centers in the country.
Changes in the regulatory framework, such as implementation of compulsory third-party motor insurance in 2010, export credit insurance in 2013, a bonus-malus system for motor insurance from 2013, and compulsory pension insurance in 2014 led to the structural changes and resulted in mergers and acquisitions during the review period.
Growth in the country's economy, healthcare reforms and aligning compulsory insurance classes with Eurasian Economic Union members will drive the industry over the forecast period.
The prominent expansion strategies adopted by Armenian insurers are extending to other less penetrated African countries such as Cameroon, Western Sahara and Algeria, among others, by either acquiring local businesses or setting up own branches and distribution channels.
Major Players in insurance market of Armenia
Rosgosstrakh Armenia Insurance CJSC, Ingo Armenia Insurance CJSC, Nairi Insurance LLC, Reso Insurance CJSC, Armenia Insurance Ltd, Sil Insurance CJSC are the leading market players in the Armenian insurance market. Foreign companies are reluctant to enter the market due to various constraints currently faced by the sector.
Though Armenian market is lagging behind in full development of insurance and banking sector but increasing old population, positive growth despite of slowdown in European Union is opening new doors of opportunities for insurance sector. Various improvements in financial sector can trigger the growth of the insurance industry of Armenia.
Key topics covered in report
Current economic scenario of Armenia.
Detailed analysis of the key segments in the Armenian insurance industry, with market forecasts to 2019.
Historical values for the Armenian insurance industry for the report's 2010-2014 review period, and projected figures for the 2014-2019 forecast period.
Major market players in the insurance sector of Armenia.
Key consumer trends influencing the insurance market
Consumer demographics, trends and behaviors
For more coverage click on the link below:
Ankur Gupta, Head Marketing & Communications
'The Insurance Industry in Armenia, Key Trends and Opportunities to 2019' report provides detailed analysis of the market trends, drivers and challenges in the Armenian insurance industry.
Ankur Gupta, Head Marketing & Communications
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