Azerbaijan, Baku, 30 July / Trend I.Khalilova /
The insurance market of Azerbaijan does not expect high growth rates until the end of 2013, the head of the State Insurance Supervision Service under the Ministry of Finance Namik Khalilov said.
"Over six months, the market has grown by 17 percent; roughly the same dynamics at the level of 15-20 percent will remain until the end of the year. I think this is a normal rate," Khalilov told Trend on Tuesday.
Currently, in his opinion, the market is growing more rapidly in depth, whereas last year there were more significant factors - namely, the introduction of new types of insurance for extensive growth. "This year, the insurance market is growing not due to the introduction of new compulsory insurance, but due to the expansion and deepening of existing types," Khalilov said.
There are markets where compulsory insurance covers 70 percent of the market. In Azerbaijan, the share of voluntary insurance greatly exceeds mandatory insurance.
In January-June 2013, over two-thirds (more than 129.5 million manat) of Azerbaijani insurance companies' premiums were collected on types of voluntary property insurance. Payments on these types amounted to 41.02 million manat (more than 70 percent of all claims). Meanwhile, the market of voluntary insurance rose by 23.06 percent in annual terms, whereas payments - by 63.36 percent.
"I think the trend will continue, though there are small markets, where insurance from zero has increased dramatically to 90 percent of the total market due to the liability insurance of vehicle owners. This situation is not observed in Azerbaijan; voluntary insurance in our country occupies quite a large space and perhaps has increased its share. However, it is still at a normal level and will decline," the State Insurance Supervision Service head said.
The total premiums of all companies operating in the country amounted to 198.02 million manat (an increase of 16.85 percent) in the first half-year, and payments made during the reporting period - 58.097 million manat (a 40.2 percent rise).
Last year saw rapid growth of the insurance market of Azerbaijan - insurance premiums collected 342.5 million manat, or 60.8 percent more than in 2011. Despite the increase, the market potential is far from being exhausted in full.
"The potential of the insurance market, if it is to wear a full-blown character, amounts to one billion manat. We expect to achieve market volume of this index by 2015-2016. This can be achieved through the adoption of new laws, introduction of both new and not previously applied acts in the insurance industry, development of educational work among the population," the chairman of the Association of Insurance Companies of Azerbaijan Orkhan Bayramov told Trend on Tuesday.
According to the survey held last year among 2,500 respondents, only 27 percent of respondents have either a positive or negative experience in the insurance industry, while 73 percent of the population have not previously benefited from practical insurance services. According to the head of the association, with the use of compulsory insurance, the ratio will change, and the number of people who do not use insurance services will be reduced to 40-50 percent. The current situation, according to Bayramov, has to do with the lack of information about insurance, and it is planned to undertake a lot of work in this direction.
The market has the ability of annual growth of 10-12 percent even without the adoption of the law. With the adoption of the new law 'On insurance of agriculture' the market could grow by at least 20-30 percent, as the new field of activity will be launched. The start of the mandatory health insurance could result in the increase of insurance fees at times, Bayramov said.
The insurance sector is specific and covers the general population. From this point of view, financial possibilities of market participants should be sufficient to provide quality services to the public, to ensure full and timely payments.
Over ten years, the capitalization of the insurance market has grown by 16 times, the income of insurance companies - 17.5 times. In 2002-2013, the minimum capital requirement for insurers has increased from one million manat to five million manat, resulting in strengthened financial sector stability. The total capital of all insurance companies in the country has increased from 18.4 million manat to 300 million manat. The companies' net income for the period has increased to 48 million manat.
The total capital of the insurance market amounted last year to 343.44 million manat, including paid-up share capital of the market - 294.06 million manat and other capital reserves - 49.39 million manat.
There are 28 insurance companies and one reinsurance company operating in Azerbaijan
There are three companies with the right to engage in life insurance in Azerbaijan - Pasha Heyat, Ateshgah Heyat and Qala Heyat. 12 companies have a license for implementation of compulsory insurance.
The official exchange rate on July 30 is 0.7845 AZN / USD.