News / AIU clarification on comprehensive health insurance

Comprehensive Health Insurance cannot be considered as insurance model

The Armenian Insurers Union clarifies: currently, the Ministry of Health of the Republic of Armenia (MOH) is circulating a comprehensive health insurance (CHI) model that is not based on the key principles of the insurance system, and therefore cannot be considered insurance activity. In particular:

1. Insurance activities in the Republic of Armenia are subject to licensing by the Central Bank of the Republic of Armenia (CBA); however, in the case of the model proposed by the Ministry, the provision of services under the CHI system will be carried out by the Comprehensive Health Insurance Fund, which will not be licensed by the CBA and will not be subject to its regulation and supervision;

2. Insurance activities imply the assumption of risk by the company at the expense of its own capital. Currently, 7 private and 1 state insurance companies licensed by the Central Bank of Armenia provide insurance services in the RA. The 7 operating private insurance companies together manage technical reserves formed from capital and own and collected funds in the amount of 30 billion AMD, by which they are responsible for the obligations they have undertaken;

3. The activities of insurance companies are regulated and supervised by the RA Law "On Insurance and Insurance Activities", the provisions of Chapter 54 of the RA Civil Code, related laws, as well as strict legal and regulatory framework established by the Central Bank, and the continuity of their activities is guaranteed by the availability of capital in accordance with the limits established by the Central Bank and is subject to supervision on a monthly basis;

4. As a result of discussions held in recent months with the participation of the Armenian Insurers Union on the introduction of a comprehensive health insurance system, the Ministry of Health has proposed to insurance companies to provide insurance coverage to the public, which would include additional health services not included in the CHI as well as services that are excluded from CHI scope, such as dental services and palliative care. The Armenian Insurers Union informs that such an approach cannot be considered public-private partnership and be acceptable for insurance companies, since in this case, the fundamental principles of insurance are also undermined.

In conclusion, we would like to emphasize once again that the model proposed by the RA Ministry of Health is state social security, a small-scale example of which is the currently operating state order mechanism, which is fundamentally different from insurance activity and is not based on the principles of insurance activity, as well as the existing legal and supervisory mechanisms regulating insurance activity, and therefore cannot be considered insurance.