In international practice a term exists for an insurance company established by a group to insure its own risks. It must be said at the outset: the Law of Georgia on Insurance Activity does not recognise the term, and no separate captive regime exists in Georgia. Group self-insurance is purely a commercial decision, and the company created for it falls entirely under the general regime of insurance activity: joint-stock form, licence, capital and solvency requirements and permanent supervision. On this page we explain what this means in practice and which articles create the framework a captive plan must fit.
The Legal Position: a Captive Is an Ordinary Licensed Insurer
Under Article 9, an insurer is a legal entity created for insurance activity and licensed for the relevant type of insurance. The only permissible organisational form is a joint-stock company, whose firm name must contain the word “insurance” in Georgian; budget organisations may neither found an insurer nor be its founder.
A group managing its own risks through a separate company therefore establishes an ordinary insurer — restricted shareholder circle, but no softening of legal status. Article 22 licenses only three activities — life insurance, non-life insurance and reinsurance — and the group company chooses among them; shareholder composition is regulated through supervisory conditions, not an exception regime.
Establishment and the Licensing Procedure
The licence applicant submits a substantial package: a written application, founding documents, the registration certificate, an extract from the securities registry on the distribution of shares, banking documents confirming full monetary payment of the minimum capital, fitness documentation for significant shareholding owners and administrators, information on the origin of capital, and a 3-year business plan including the reinsurance programme.
The licence is issued for an indefinite term, to a specific insurer, and is non-transferable. The insurer must use the licence at least once every 6 months; and where an insurer wishing to conduct reinsurance already holds a licence for that type of insurance, no additional licence is needed — it suffices to notify the Service within 10 working days of commencement.
Article 25 sets the grounds for refusal: documents not meeting the statutory requirements and not corrected in time; inaccurate or incomplete information; administrators or significant shareholding owners failing fitness requirements; absence of the right to conduct insurance activity; a revoked licence whose grounds persist; or pending insolvency or bankruptcy against a significant shareholding owner. Refusal is a reasoned written answer, open to appeal.
Capital, Reserves and Solvency
Article 13 grounds financial stability on capital, insurance reserves and the reinsurance system. The minimum capital is set by the Service by type and form of insurance and must not be less than one third of the calculated solvency margin; the funds sit continuously with a licensed Georgian bank on a separate account with at least one-year periodicity, and their use, like any capital-related transaction, requires the Service’s prior written consent.
The specificity of a captive emerges exactly here: even with a single owner from the group, the company cannot operate on the logic of an internal group bank account — capital sits on a segregated account, reserves are created, and the insurer remains responsible to the policyholder within the full scope of obligations under the insurance contract notwithstanding any concluded reinsurance contract. Article 16 adds the solvency guarantees: the insurer must observe the economic norms and limits established by the Service and select assets covering the reserves according to the conditions of diversification, returnability, profitability and liquidity.
Permanent State Supervision
Article 19 defines the supervisory authority: the Service — an independent body with special authority created to regulate insurance, accountable to the Government, which may suspend or annul its unlawful decisions. A consultative supervisory board of 7 members comprises the chair of the parliament’s finance and budget committee, the ministers of finance, economy, labour and health, and environmental protection, plus experts nominated by the prime minister.
The Service is headed by a chief appointed for a 5-year term on the board’s recommendation. This architecture applies to captives as well: the company lives by the Service’s norms, and international insurance norms apply only where the Service has set no rule.
Frequently Asked Questions
Below are the questions groups ask most often when considering a captive, answered from the norms of the Law of Georgia on Insurance Activity.
Does a separate captive regime exist in Georgia?
No. The law does not recognise “captives”: a group-founded insurance company is an ordinary licensed insurer — a joint-stock company under the general requirements.
Can a captive be owned by a single group company?
Shareholder composition is not restricted as such; what the law restricts is fitness — of significant shareholding owners and administrators — together with transparency of the capital’s origin and full monetary payment of the minimum capital.
What capital requirements apply?
The minimum capital must not be less than one third of the solvency margin; the funds sit in a licensed bank on a separate account with at least one-year periodicity, and transactions require the Service’s prior written consent.
Who supervises the captive after establishment?
The Service — the independent supervisory authority that sets norms, consents to capital-related transactions and governs the insurer on an ongoing basis.
How We Help on Legal.ge
The lawyers of Legal.ge assist groups across the full cycle of captive planning: we assess the risk profile, select the licensed activity, prepare the licensing package with the business plan, model capital and reserves and represent you before the Service. Contact us — and group self-insurance will become reality on a complete legal foundation.