Conceptual Framework of Liability Insurance
Directors' and officers' liability programs, like professional liability insurance generally, rest in Georgia on the Law of Georgia on Insurance. Under the law, the object of insurance may be any property-related or personal non-property interest that does not contradict Georgian legislation. Within this framework, liability insurance is of particular importance — insurance connected with damage caused by the insured person to a third (natural or legal) person or to that person's property. It is precisely this category that covers programs allocating the liability risks of governing persons and professionals.
It is worth noting that the law does not give these products a separate statutory name: directors' and officers' liability insurance belongs to the voluntary non-life class, and its detailed content is shaped by civil-law design — the conditions of the contract. When building a program, the precision of the contractual formulations is therefore decisive.
Licence Classes and the Insurer's Corporate Form
The licence for insurance activity is issued by the Insurance State Supervision Service in accordance with the Law on Licences and Permits, and may be granted only to a joint-stock company. The licence is issued for only three activities: life insurance; insurance (non-life); and reinsurance. Professional liability programs fall within the non-life class.
The licence is issued for an indefinite term and to a specific insurer, and its transfer to another legal person is impermissible. The insurer must use the insurance licence at least once every 6 months, and where changes are made to the documents submitted for licensing it must notify the Service and submit the relevant documents within 7 working days of the change. A licence applicant submits, among other things, a 3-year business plan and documentation confirming the fitness of significant shareholders and administrators.