Forecast for Azerbaijan's insurance market growth may be revised

By Aynur Jafarova

The forecast for growth of Azerbaijan's insurance market for 2014 may be revised, Head of State Insurance Supervision Service under the Finance Ministry Namig Khalilov told journalists on June 10.

Earlier it was expected that the market growth for 2014 will stand at about 15-20 percent.

"When these forecasts were made, the Central Bank of Azerbaijan (CBA) had not yet taken a decision on tightening the allocation of loans for purchasing cars that provided a significant portion of sales of the Certificates of Insurance. So, I am not sure if the forecast can come true," Khalilov noted.

He also added there is still enough time by the end of the year, and the market is able to recover.

The number of policies on compulsory automobile liability insurance has declined by 16.9 percent, and the volume of fees of this type decreased by 18.9 percent compared to April 2013.

The average size of the insurance premium on compulsory automobile liability insurance in Azerbaijan in April amounted to 71.3 manats. The insurance companies in April 2014 concluded 94,952 insurance contracts on compulsory automobile liability insurance, and collected premiums totaling more than 6.7 million manats.

Some 28 insurance companies are working in Azerbaijan.

Khalilov went on to say that the State Insurance Supervision Service will not interfere with the transaction on the sale of local insurance companies to foreign investors.

"We will not oppose to such deals," he said.

Meanwhile, the State Insurance Supervision Service has not received any request from foreign companies to enter the local market.

Currently, the share of foreign capital in the Azerbaijani insurance market does not exceed 10 percent, and the limit for participation of foreign capital in the local insurance market is set at 30 percent.

AIG Insurance (now Chartis), AXA, Miracle Insurance and Financial Group, Basak, Glencarron Group Limited are the largest international players in Azerbaijan's insurance market.

Also, Slovenian Sava Re reinsurance company, German Munich Re insurance company, Russian ROSGOSTRAKH, ROSNO companies have shown great interest to Azerbaijan's insurance market.

In his remarks Deputy Head of State Insurance Supervision Service under the Finance Ministry Mushvig Israfilov said the insurance agents in Azerbaijan will submit reports on their activities since autumn of 2014.

First, such reports will be presented by the related agents in the third quarter of this year.

"This will allow ensuring timely reporting of agents, brokers and other professional market participants," he said adding that the relevant regulations should be set in the Justice Ministry for this purpose.

"They will be accepted both in electronic and paper forms," he added.

As of 2013, some 800 insurance agents were registered in Azerbaijan, 52 of which were legal entities, and 748 physical entities. In 2012, some 643 agents worked in the country, 46 of which were legal entities, and 597 physical entities.

A corresponding increase of demands for agent services began in 2011. The number of insurance agents in the country grew when the law 'On mandatory insurance' came into force.