Despite the obvious changes since 2006, when the Central Bank of Armenia (CBA) established control over the country’s insurance market, this market is still behind its developed counterparts.

Vahe Vardanyan, Head of the CBA Financial Policy and Analysis Department, pointed out a number of factors such as the lack of insurance culture and of confidence in insurance companies, as well as low average monthly wages. “Insurance is a relatively expensive service, and a person makes a decision after satisfying his or her essential needs –food, public utilities, and so on,” Vardanyan said. He also pointed out the problem of compulsory insurance (automobile liability insurance, medical insurance etc..). According to him, it will give impetus to the development of insurance.

Among other problems are also large-scale re-insurance – Armenian companies re-insure most of their risks at foreign insurers and reinsurers. As a result, most insurance premiums are transferred to reinsurers, which reduces insurance companies’ profits. “But the Armenian insurance companies are not so strong now to reinsure their risks, especially aviation or liability insurance risks,” Vardanyan said.