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Obtain a Reinsurance License in Georgia

Mariam

RegHub Georgia Specialist

Obtaining a reinsurance license in Georgia is available to locally registered legal entities that meet higher standards for capital adequacy, financial stability, and risk control. The licensing framework is designed for market participants whose business involves accepting substantial insurance risks, which is why applicants must prove that they can operate sustainably even when losses become more volatile.

The regulator carries out a detailed review of the legal entity applying for a reinsurance license in Georgia. This includes assessing whether the company can absorb the consequences of major insured events and cover its obligations with its own funds under stress-test conditions. The applicant must also confirm the adequacy and quality of its assets, the liquidity of its financial position, and the alignment between its capital base and risk management model.

Licensing a Reinsurer in Georgia: Competent Authority and Legal Requirements

Georgia’s insurance market has shown steady growth: total insurance premiums are already approaching GEL 1.5 billion, while the sector expands by around 12–15% annually. Even so, the reinsurance segment is still developing and remains closely connected with international reinsurance chains.

The regulatory framework allows reinsurance activity only in relation to risks accepted from insurance companies, thereby excluding direct dealings with end policyholders. At the same time, prior licensing for reinsurance activity in Georgia is mandatory. The law also sets out requirements covering financial reliability, transparent disclosure, and the obligation to maintain regular interaction with the supervisory authority.

Applications are reviewed and supervised by the Insurance State Supervision Service of Georgia (ISSSG). This authority performs the initial assessment of the applicant and continues regulatory oversight throughout the licensee’s operations. As part of admission to reinsurance activity in Georgia, the regulator applies a multi-level review of the applicant’s financial and organizational capacity.

Particular attention is paid to:

• the adequacy and structure of own funds in terms of covering the obligations the company intends to accept;

• the characteristics of assets, including liquidity, the permissibility of investment instruments, and the level of diversification needed to avoid critical risk concentration;

• the design of the risk management system, including liability limits, retrocession protection mechanisms, and stress testing of potential losses;

• the corporate governance model, which must clearly separate the functions of management bodies, finance units, and supervisory services without overlapping powers or conflicts of authority.

The regulator also evaluates whether the company is ready to comply with a systematic reporting regime, including its ability to promptly provide accurate operational data and maintain transparency in its internal decision-making procedures.

For Which Services Can a Reinsurance License Be Obtained in Georgia

A reinsurance license in Georgia is issued to companies whose planned work involves receiving, transferring, and redistributing insurance risks between insurers and reinsurers. The activity may look narrow at first glance, but the licensed scope includes several key formats used in international insurance practice.

Acceptance of Risks from Insurance Companies / Inward Reinsurance

A basic licensed activity is the acceptance of risks from primary insurers, either in part or in full. The reinsurer undertakes financial responsibility for insured events agreed in advance, including major property damage, catastrophe exposure, or third-party liability.

For the insurance company, this structure reduces the pressure on its capital. Instead of holding the entire risk on its own balance sheet, it transfers part of the obligation to a reinsurer and can keep solvency more stable.

Transfer of Risks to Other Reinsurers / Retrocession

A Georgian reinsurer may also transfer accepted risks further through retrocession. This mechanism is used to spread liability across several reinsurance participants, reduce portfolio concentration, and limit the impact of large losses on one company.

Quota Share and Non-Proportional Reinsurance

Obtaining a reinsurer license in Georgia permits different reinsurance contract formats:

• Quota share reinsurance, where the reinsurer receives a fixed share of each insurance contract.

• Excess of loss coverage, where payment applies only to losses above a set limit.

• Excess of risk coverage, which protects against large single insured events.

These formats are legally recognized instruments for dividing financial responsibility between professional market participants.

Catastrophe Reinsurance / CAT Risk Coverage

Licensing a reinsurer in Georgia allows the company to offer coverage for catastrophic risks, including earthquakes, floods, industrial accidents, and other events that are difficult to predict and may cause substantial financial loss.

Consulting and Risk Management Services / Within the Insurance Market

A Georgian reinsurance license also allows the holder to provide related services, including:

• actuarial and risk analysis;

• assessment of insurance portfolios;

• design of reinsurance protection structures;

• support for insurance programs arranged for corporate clients.

From a legal perspective, these services are treated as auxiliary to reinsurance activity.

Admission to Reinsurance Activity in Georgia: What the ISSSG Reviews

Even before the formal authorization for reinsurance activity in Georgia is issued, the ISSSG conducts a detailed legal, financial, and structural review of the proposed contractual framework. At this stage, the regulator looks at how rights and obligations are divided between the parties, how insurance or reinsurance liabilities arise, and how payments are calculated.

Particular attention is given to maximum liability limits, exclusions from coverage, and the procedure for handling major losses that could affect capital preservation. The regulator also reviews concentration risks, including exposure linked to individual counterparties and specific portfolio segments. These factors show how likely it is that the company may face a sudden one-time pressure on its financial stability. If the contractual documents do not match the financial and actuarial calculations, the application may be treated as internally inconsistent. This usually leads to additional regulatory questions and the need to revise the submitted materials.

The applicant must also describe its counterparty policy. This includes minimum credit rating requirements, as well as the rules for reviewing and updating admission criteria. Such detail allows the regulator to compare the declared scale of operations with the company’s capital size and capital structure, carry out an initial assessment of its financial position, and understand whether it can withstand stress scenarios if the insurance portfolio develops unfavorably.

Prudential Capital Requirements

To obtain a license to carry out reinsurance activity in Georgia, the applicant must confirm minimum capital of GEL 7.2 million, equivalent to approximately USD 2.8 million. This amount must be deposited in full before the license application is submitted and properly recorded in the applicant’s accounting documents. Partial or staged capital deposits are not accepted, as they are treated as a failure to meet the basic financial reliability standard.

When reviewing an application for a license to provide reinsurance services in Georgia, the regulator examines documentary proof of the origin of the applicant’s own funds. The applicant must show that the capital has been formed on a sound economic basis, that all financial flows are transparent, and that the funds have been fully credited to the company’s account. Debt financing presented formally as a capital contribution is viewed as a factor that weakens the financial stability of the organization and may lead to suspension of the review or refusal to consider the application further.

Another mandatory condition for obtaining a reinsurance license in Georgia is a detailed three-year financial development concept. This document must show the expected development of the business, taking into account the terms of the proposed contracts, insurance premium volumes, commission income, and all operating and administrative costs.

Obtaining a License for Reinsurance Operations in Georgia: Governance and Compliance Requirements

A reinsurance license in Georgia may be obtained only by legal entities established under local law and able to confirm their actual presence in the jurisdiction. The company must have a real operating office that supports day-to-day activity and communication with the supervisory authority.

The company’s management structure must be in place before the application is filed. The regulator pays close attention to how authority is divided between capital contributors and executive management. Structures where participants are formally listed but have no real management influence are not treated favorably.

Candidates for senior positions in a company applying for authorization to provide reinsurance services in Georgia undergo a full review of business integrity, professional competence, and practical readiness to manage insurance risks. The regulator also assesses whether their experience is relevant to reinsurance mechanisms and complex risk portfolios. The internal governance system must clearly separate functions so that conflicts of interest and excessive concentration of decision-making are avoided.

Before submitting an application for a license to conduct reinsurance activity in Georgia, the applicant must prepare a complete set of internal regulations, including:

• rules for setting the acceptable level of insurance and reinsurance risk;

• limits on dealings with counterparties;

• principles for asset placement;

• detailed decision-making procedures for new contractual portfolios.

Separate rules must cover underwriting, assessment of large and catastrophic losses, and the procedure for settling such events. Proper attention is also given to mechanisms for preventing and managing conflicts of interest between shareholders, management, and external partners. If the internal policies are inconsistent, the regulator may issue additional requests or suspend the application review.

To obtain a license for services involving the transfer of insurance risks in Georgia, the applicant must also confirm that it has internal KYC procedures adapted to the specifics of the reinsurance market, where interaction usually takes place between professional participants with a high level of regulatory awareness. The ISSSG assesses not only the existence of formal policies, but also how they work inside operational procedures, including whether the company can identify and prevent heightened risks in time during the preliminary approval and conclusion of reinsurance contracts in Georgia.

How to Obtain a License to Provide Reinsurance Services in Georgia

The licensing process begins with working out the limits of participation in insurance portfolios and fixing the principles for retrocession-based risk allocation. At the same time, the applicant calculates the adequacy of its own funds, taking into account currency exposure as well as scenarios involving large and catastrophic losses. The further stages are set out below.

Formation of the Corporate Governance Structure

At the next stage, a legal entity is incorporated in Georgia, with a transparent ownership structure and clear beneficial control being mandatory. Management bodies and responsible officers are appointed, and their functions are allocated in a way that prevents conflicts of interest. In parallel, the company prepares a set of internal rules covering management procedures, staff responsibilities, and the internal audit system.

Preparation of the Financial Base

The charter capital is deposited into an account with a local bank, and a detailed set of documents is prepared to confirm the origin of the funds and the economic basis for their formation. The dossier also includes forecasts for insurance premiums, operating expenses, commission costs, and liquidity indicators. Stress scenarios are added as well, together with an assessment of how retrocession protection affects net loss ratios and the capital burden.

Filing and Review of the Application for a Reinsurance License in Georgia

Once the application has been registered, the regulator carries out an initial check to confirm that the materials are complete and formally correct. If gaps or inconsistencies are found, the review is suspended until the comments are addressed. During the examination, the ISSSG may send additional requests concerning financial transactions, the structure of liability limits, reinsurance contract terms, and corporate governance arrangements.

The applicant must submit updated financial tables, explanatory notes, or revised documents within the prescribed deadlines. The entire exchange with the regulator is aimed at removing any mismatch between the declared business concept and the future reinsurer’s actual operational capacity.

Decision-Making and Start of Operations

If the ISSSG issues a positive decision, the applicant receives authorization to conduct reinsurance activity in Georgia. At this point, the retrocession protection mechanisms included in the financial model are put into operation, allowing risks and own funds to be aligned from the beginning of the reporting period.

Documents for Obtaining a Reinsurance License in Georgia

The basic document file includes legal, financial, and organizational materials that allow the regulator to assess the applicant from all key angles. In the application, the company states the intended type of activity, the planned scale of operations, and current contact and identification details of the legal entity.

The package must include corporate documents confirming that the legal entity has been properly established and registered in Georgia.

These usually include:

• the charter;

• registration extracts;

• other title or corporate documents confirming the company’s legal capacity to carry out the declared type of insurance activity.

The regulator pays close attention to the ownership structure. A company seeking to obtain a license for reinsurance activity in Georgia must submit detailed information on its ultimate beneficial owners and the chain of ownership, so that the persons who actually make strategic decisions and benefit from the company’s activity can be identified. The applicant must also provide information on directors, senior managers, and executives, including evidence of their professional background, qualifications, and business reputation.

The document file must contain a business plan describing the company’s strategic areas of work, target insurance and reinsurance portfolios, geography of operations, planned liability limits, and a staged model for medium-term development. The financial part is disclosed through forecast indicators for a three-year period. The financial plan reviews expected insurance premiums, operating expenses, commission payments, cash flow movement, and key indicators of financial resilience and solvency.

The terms of reinsurance contracts must also be disclosed, including the allocation of insurance liability and the procedure for claim settlement and payments. An important part of the documentation is the section describing retrocession mechanisms, meaning the transfer of part of the accepted risks to other participants in the reinsurance market, as well as the effect of those transactions on the company’s final net exposure. The package must also include an investment policy setting out permitted investment instruments, liquidity requirements, and regulatory limits on risk concentration.

Obtaining a Reinsurer License in Georgia: Tax Burden

Taxation of reinsurance companies in Georgia forms part of the general corporate tax system, which is designed to attract international capital and financial services. At the same time, reinsurance activity has several specific features due to the way risks are distributed and insurance premiums move across borders.

After obtaining a reinsurance license in Georgia, corporate tax becomes payable when the financial result is actually distributed or when a transaction is treated as a profit distribution to participants. The tax rate is 15%, and it applies only to amounts actually withdrawn from the company in favor of participants, shareholders, or other beneficiaries.

The regulator also pays close attention to transactions that may be classified as concealed profit distributions.

These may include:

• certain transfers to related parties;

• payment structures that do not match market terms;

• other economically unjustified withdrawals of funds that may be viewed as an attempt to bypass the established tax rules.

For indirect taxation, Georgia applies a standard VAT rate of 18%. However, for reinsurance activity, it is important to distinguish between risk-transfer operations and related service functions. Direct insurance and reinsurance operations involving the acceptance and transfer of contractual risk are generally not subject to VAT. Auxiliary services, such as agency commissions or administrative functions, are subject to VAT under the general rules.

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Obligations of a License Holder Providing Reinsurance Services in Georgia

After obtaining a license to carry out reinsurance activity in Georgia, the licensee assumes a set of obligations aimed at keeping operations transparent and compliant with insurance supervision requirements. First, the licensee must comply with the established standards of financial stability and solvency. In practice, this means maintaining a sufficient amount of own funds or capital, forming insurance reserves in line with the obligations accepted, and preventing situations where accepted reinsurance risks exceed the permitted limits.

The licensee must submit financial, statistical, and regulatory reports within the prescribed deadlines, in full, and in the approved formats. Reporting includes information on concluded reinsurance contracts, the structure of risks, premium and loss amounts, and other indicators that allow the supervisory authority to assess the company’s stability and transparency.

In addition, the licensee must comply with the terms of the reinsurance contracts it has entered into and ensure that they are properly documented. Breach of these obligations may trigger supervisory measures, including fines, operational restrictions, or license revocation.

Reinsurance License in Georgia: Final Review Before Filing

When a reinsurance license in Georgia is being reviewed, the final decision of the competent supervisory authority is based on an overall assessment of the applicant’s core operating parameters. These include the adequacy and structure of capital, the model used for accepting insurance and reinsurance obligations, the principles for distributing risks through retrocession mechanisms, and the stability of internal corporate governance. If these elements are inconsistent or insufficiently developed, the regulator may issue comments, which can affect both the timing and the outcome of the application review.

Professional legal and organizational support in obtaining a reinsurance license in Georgia helps identify and remove possible gaps in advance. This includes checking whether the company’s financial and economic model, contractual framework, and internal management rules are aligned. It also helps build clear, well-grounded communication with the regulator.