Cuts to growth rate in Azerbaijan's insurance market to last by end of 2014
By Aynur Jafarova
Cuts to the growth rate in Azerbaijan's insurance market will continue until the end of 2014, Khayal Mammadkhanli believes.
"Like a few years ago, the insurance market is developing a
one-sided focus on car insurance and some types of compulsory
insurance," the expert in the field of insurance told Trend Agency.
He noted the compulsory insurance is not well developed in
Azerbaijan.
"The compulsory insurance of passengers hasn't paid off yet from
the beginning of the year, and that is incredible considering the
growth of road accidents," he concluded.
The tightening of car loans, reducing the volume of imports of
vehicles due to the transition to the environmental standard Euro-4
since April, 1, as well as changes in terms of inspection, are the
main reasons for the weakening of the market.
"All these factors have weakened the insurance market,"
Mammadkhanli noted.
For the development of voluntary insurance, the market hasn't
offered a sufficiently wide range of products as well as new
insurance services. There are also problems in the field of working
with clients, obtaining reimbursements for insurance claims,
etc.,
"And these factors affect the overall pace of development of the
market," he added.
Mammadkhanly thinks insurance companies should try to get people to
buy insurance services on a voluntary basis, and it is possible
through the promotion and provision of appropriate insurance
services.
In subsequent years, the growth of insurance in Azerbaijan is
possible due to the mandatory health insurance, the introduction of
which is expected in 2015. First of all it is necessary to
determine the appropriate fee for the insurance policy, prepare the
infrastructure, ensure the connection of all the insurance
companies to the system, hold trainings in all health facilities,
as well as creation of a single registry of patients for the
introduction of this type of insurance.
"We can expect significant growth in the market at the expense of
this kind of insurance," Mammadkhanly said.
The changes in conducting agricultural insurance in the country
through the provision of agricultural subsidies and soft loans and
other financial resources may also provide impetus to the
development of the market and may become a new stage in the
development of agricultural insurance.
Further growth of the insurance market will also be provided at the
expense of life insurance.
"The interest in life insurance has seriously increased in the
country, because many people use it as an investment vehicle,"
Mammadkhanly said, "Currently, means on life insurance allow
companies to reduce the tax base, which makes it possible for
companies to keep profits for themselves, and this activity has
become an integral part of the social package."
Currently, an appropriate control mechanism has been created and an
even greater increase in this market can be expected over time.
Azerbaijan's Ministry of Labor and Social Protection of
Population has implemented hard work on gaining control over labor
agreements and formalization of workers at the workplace, and as a
result companies have to insure their employees. This will make it
possible to provide a rise of both life companies and the
market.
The three companies with the right to engage in life insurance in
Azerbaijan, in particular Pasha Heyat, Atashgah Heyat and Gala
Heyat collected 63.5 million manats for all types of life-insurance
in January-July 2014, which is a nearly 56 percent (22.83 million
manats) increase over the same period of last year.
The share of life insurance premiums in the total amount of
insurance fees applicable in the country amounted to 25.2
percent.
The insurance market grew by 9.9 percent within the 7 months of
2014 compared to the same period of last year.
If compulsory insurance was the main driver of market growth in
2012, last year the growth of the market was mainly provided by the
voluntary insurance. Last year the volume of voluntary insurance
market grew by 26 percent, while the growth for compulsory
insurance accounted for 5.64 percent.
Some 28 insurance companies are working in Azerbaijan. 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.