XPRIMM: How would you describe the evolution of Armenia’s insurance market over the past decade, and what have been the most significant regulatory milestones during this period?

Gayane GASPARYAN: Over the past decade, Armenia’s insurance market has experienced significant transformation, building upon foundational reforms initiated in 2006 when the Central Bank of Armenia (CBA) became a mega regulator. This shift laid the groundwork for a more integrated, stable, and market-oriented insurance sector.

A major catalyst during this period was the implementation of Compulsory Motor Third Party Liability (CMTPL) insurance in 2011, which not only expanded coverage but also reshaped public perception of insurance as a modern tool of risk management, rather than additional “tax”. This was further supported by the 2014 launch of the three-pillar pension system, fostering long-term saving and encouraging broader investment in insurance-linked financial products.

Since then, continued regulatory alignment with EU standards has been a priority over the past decade, with particular emphasize of prudential oversight, consumer protection, and financial inclusion. Key achievements include:

• Establishing a nationwide intermediary network to expand access, especially in underserved areas.
• Advancing digitalization, promoting digital tools like mobile applications, enabling more convenient and transparent service delivery.
• Sustaining financial literacy campaigns and integrating them into education, empowering consumers.
• Promoting cross-sectoral insurance products, such as bank-linked coverage for mortgages and employment.

XPRIMM: What strategic role does the Central Bank of Armenia play in shaping the long-term development and stability of the insurance sector?

G.G.: The Central Bank of Armenia (CBA) plays a strategic role in ensuring both the long-term development and stability of the insurance sector. As the integrated financial regulator, on one hand, the CBA runs its traditional role of setting the regulatory framework, supervising market conduct, and supporting sectoral growth through a proactive and risk-based approach. To that end, the CBA regularly reviews and updates regulatory standards in line with international best practices, particularly those outlined by the International Association of Insurance Supervisors (IAIS). This includes capital adequacy, solvency, risk management, IFRS-aligned financial reporting and governance requirements.

However, our role extends beyond day-to-day supervision. CBA also plays a crucial role in development of the market by identifying long-term priorities and addressing structural barriers to insurance growth. We do intervene when and where market fails to mobilize resources. Currently, for example, as the pension system approaches the pay-out phase and more people reach retirement age, we are working to attract a reputable life insurance company in order to ensure a smooth and seamless transition into this phase.

XPRIMM: Are there plans to expand mandatory insurance schemes beyond MTPL, such as in health, natural disaster coverage, or professional liability? If so, what timelines or frameworks are being considered?

G.G.: The Central Bank of Armenia (CBA) acknowledges the important role that mandatory insurance plays in the development of the insurance market, particularly in areas of systemic or public interest risk. In collaboration with the government, we are actively involved in exploring future mandatory schemes, including in health, natural disaster coverage, and professional liability.

At the same time, we place strong emphasis on enabling the growth of voluntary insurance, recognizing it as essential for long-term market sustainability. Our strategy focuses on creating the right conditions and incentives for voluntary uptake, rather than relying solely on mandates.

To this end, the CBA invests in building critical market infrastructure, advancing financial literacy, ensuring consumer protection, and strengthening regulatory frameworks. We promote competition, trust, and professional development to support a robust and innovative insurance ecosystem.

This balanced approach ensures that insurance becomes not just a requirement, but a trusted and accessible financial tool for all Armenians.

XPRIMM: Given Armenia’s exposure to natural disasters, is there a regulatory push toward developing catastrophe insurance frameworks, pooling mechanisms, or public-private risk-sharing models?

G.G.: The Central Bank of Armenia (CBA) acknowledges the critical need for robust catastrophe risk management frameworks. In collaboration with the Government of Armenia, the CBA has initiated several measures to enhance the country's resilience to such risks.

A notable example is the agricultural insurance scheme that was launched as a pilot in 2019 with government support. Due to structural and operational challenges, including issues related to risk assessment, loss adjustment, data quality, and institutional readiness, the scheme faced considerable setbacks.

Currently, Central Bank of Armenia, in collaboration with the Government and key stakeholders, is re-evaluating the entire framework of agricultural insurance. Discussions are underway on how to rebuild trust and functionality in the system. The goal is to create a more sustainable and effective insurance solution that can offer meaningful protection to Armenia’s agricultural sector.

XPRIMM: How is the Armenian insurance market embracing innovation and digital transformation, and what is the regulator’s approach to encouraging InsurTech or digital distribution channels?

G.G.: The Armenian insurance market is undergoing a significant digital transformation, with the Central Bank of Armenia (CBA) actively promoting innovation and the adoption of digital technologies to enhance efficiency, transparency, and better consumer experience.

A notable advancement in this area is the implementation of the Armenian Single Window for Automotive (ASWA) platform. ASWA was launched in 2017 and serves as a centralized digital system for managing compulsory motor third-party liability (MTPL) insurance processes. It facilitates the electronic issuance of policies, real-time data exchange among insurers, law enforcement, and regulatory bodies, and streamlines claims processing. The platform's mobile application empowers drivers to self-report accidents digitally, expediting claim settlements and reducing administrative burdens.

In 2024 the CBA actively participated in the 4th Inclusive Insurance Innovation Lab, a global initiative facilitated by the Access to Insurance Initiative (A2ii) and GIZ. This initiative brought together multi-stakeholder teams from Armenia, Nepal, and Senegal to co-create innovative insurance solutions that enhance climate resilience. The Armenian team, led by the CBA, developed the ArmAgro platform, which was officially unveiled at the Inclusive Insurance Innovation Lab Ecosystem Event held at the CBA. This initiative use technology to improve access and awareness, particularly in rural and climate-exposed areas.

XPRIMM: Is the Central Bank of Armenia aligning its regulatory approach with regional or EU standards, and are there opportunities for cross-border insurance cooperation or harmonization in the South Caucasus?

G.G.: The Central Bank of Armenia is continuously aligning its regulatory framework with international and regional standards, including those of the European Union. This alignment is part of a broader commitment to enhance financial sector resilience, improve consumer protection, and foster a stable and competitive insurance market.

Our regulatory approach is guided by the principles of the International Association of Insurance Supervisors (IAIS), and we actively monitor developments in the EU Solvency II framework to identify best practices that are appropriate for Armenia’s market context. Over the past years, we have introduced several reforms aimed at strengthening governance, capital adequacy, risk-based supervision, and financial reporting.

In terms of regional cooperation, the CBA sees value in greater cross-border dialogue, particularly within our region. While formal harmonization efforts are still at an early stage, we recognize the potential benefits of cooperation in areas such as data sharing, supervisory coordination, and capacity-building. We are open to exploring platforms for joint initiatives, especially on issues of common interest such as catastrophe risk management, digitalization, and consumer protection.

Interview conducted by Daniela Ghetu