Insurance market under-developed
Insurance payments per capita make up only 11 manats (about $13) in
the world's fastest-growing economy, compared to the $555 average
in countries around the globe.
The resource-rich South Caucasus republic, which stands out for its rampant economic growth, lags behind most other Commonwealth of Independent States (CIS) countries as well. The figure is $28 per capita in the largest former Soviet republic Russia, while $53 in the Ukraine and $34 in the Central Asian state Kazakhstan.
The Finance Ministry says sluggish development of the insurance sector is due to low income of the population.
"Domestic consumers mostly spend their earnings on food, clothing and other [basic] needs. Most citizens can't afford insurance," head of the ministry's department on state insurance oversight Namig Khalilov said. "To develop the insurance sector, monthly income per capita should be at least $300, whereas the figure is slightly over $200 in Azerbaijan."
Khalilov said the lack of public confidence in insurance companies also delayed the development of the insurance market. As a result, insurance companies are under-developed.
Under the law, the minimum charter capital of companies in the field is 700,000 manats ($825,000). The Finance Ministry has offered to the Milli Majlis (parliament) to raise the requirement to 1 million manats ($1.17m) next year.
An Ombudsman in charge of insurance is to be appointed in the country soon. His office will scrutinize insurance-related disputes and his instructions will be mandatory for companies operating in the field.
The restriction on foreign nationals' establishing insurance companies in Azerbaijan has recently been lifted. Under the previous law adopted in 1999, expatriates and foreign companies were allowed to own only 49% of local insurance companies' charter capital.
A total of 29 insurance companies with 83 founders and a total charter capital of 53 million manats ($62.3 million) are currently operating in Azerbaijan. Eight of these businesses with a gross capital of 4.5m manats ($5.3m) have foreign stakeholders.
The resource-rich South Caucasus republic, which stands out for its rampant economic growth, lags behind most other Commonwealth of Independent States (CIS) countries as well. The figure is $28 per capita in the largest former Soviet republic Russia, while $53 in the Ukraine and $34 in the Central Asian state Kazakhstan.
The Finance Ministry says sluggish development of the insurance sector is due to low income of the population.
"Domestic consumers mostly spend their earnings on food, clothing and other [basic] needs. Most citizens can't afford insurance," head of the ministry's department on state insurance oversight Namig Khalilov said. "To develop the insurance sector, monthly income per capita should be at least $300, whereas the figure is slightly over $200 in Azerbaijan."
Khalilov said the lack of public confidence in insurance companies also delayed the development of the insurance market. As a result, insurance companies are under-developed.
Under the law, the minimum charter capital of companies in the field is 700,000 manats ($825,000). The Finance Ministry has offered to the Milli Majlis (parliament) to raise the requirement to 1 million manats ($1.17m) next year.
An Ombudsman in charge of insurance is to be appointed in the country soon. His office will scrutinize insurance-related disputes and his instructions will be mandatory for companies operating in the field.
The restriction on foreign nationals' establishing insurance companies in Azerbaijan has recently been lifted. Under the previous law adopted in 1999, expatriates and foreign companies were allowed to own only 49% of local insurance companies' charter capital.
A total of 29 insurance companies with 83 founders and a total charter capital of 53 million manats ($62.3 million) are currently operating in Azerbaijan. Eight of these businesses with a gross capital of 4.5m manats ($5.3m) have foreign stakeholders.
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