State Audit Agency Slams ‘Dishonest’ Insurance Companies

Absence of “strict state regulation” and “dishonest actions” of insurance companies allowed the latter to enjoy 60% profit margin from the state-funded health insurance project over the past three years, the Georgian state audit agency said on February 2.

The Chamber of Control said that initial findings of the audit of state-funded insurance program for 2008-2010 were “alarming.”

According to the agency, total of GEL 284 million has been allocated by the state to ten insurance provider companies for health insurance of about 808,000 people in 2008-2010; the agency said that the companies  “spent only 40% of this sum on healthcare services” of insurance policy holders with “profit margin of the companies exceeding 60%”.

The Chamber of Control said that “absence of strict state regulation” – Ministry of Healthcare and Social Protection is in charge of the state-funded insurance program, as well as “dishonest actions of the insurance companies,” “artificially restricted access to healthcare services” and lack of awareness campaign for insurance policy holders were the reason behind the program’s shortcoming.

GPI Holding, member of the Vienna Insurance Group, is one of the largest among those ten companies, which have been engaged in the state-funded program.

GPI Holding said that the state audit agency’s figures were largely inflated; it released on February 2 its figures showing that the company’s profit margin from the program was about 7.1% in last four years, making net profit of only GEL 5.5 million in 2007-2010.

GPI Holding’s chief executive, Giorgi Kvirikadze, said that it was state audit agency’s preliminary report and it was not yet possible to give a detailed comment on it. He, however, said that "negative pathos" in which the report was presented "cast a shadow over one of the most successful reforms" in Georgia – the health insurance program.

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