Baku, Azerbaijan, June 25
By Emin Aliyev - Trend:
The volume of fees on CASCO voluntary motor insurance of the Azerbaijani "Bakı Sigorta" JSC decreased by 40 percent a year, Deputy Board Chairman of the company Ramin Mammadov told Trend.
"Of course, this decrease was caused by the decision of the Central Bank of the country to restrict car loans - 90 percent of the decline can be directly attributed to this factor," he said.
The credit risks regulation for one borrower or associated groups of borrowers approved by the Central Bank of the country, came into force in late March. The regulator has ordered that the initial payment on automobile loans can not be less than 40, 50 and 80 percent of the value of the purchased car depending on its price and age at the time of sale.
This decision was due to increased volumes of non-performing loans, most of which accounted for car loans. Following this decision, the issuance of such loans, which generated the majority sales of auto insurance policies, were actually stopped.
"CASCO has enough unprofitable activity and most of the insurers` income received on it in the current year is ensured by the contracts signed last year. The overall profitability of CASCO steadily low," Mammadov said.
The lack of profitability of voluntary auto insurance is associated with the recovery of the market, rather than an increasing number of accidents, according to deputy board chairman.
"We monitor the dynamics of accidents and I can say that they have even declined in recent years. With the introduction of compulsory insurance of civil liability of vehicle owners of the population assessed the benefits of insurance, demand has increased. With the growing interest of citizens, naturally, the fees also have grown - but it should be understood that at the same time the payments also grow. There is every reason to believe that this trend will grow in the future and thus the lack of profitabiliy of CASCO will continue to increase," Mammadov said.
"Bakı Sigorta" collected 1.14 million AZN in January-May, according to the Azerbaijani Finance Ministry. From the beginning of the year, the company has made insurance payments at the amount of 0.99 million AZN.
Controlling interest in Bakı Sigorta is owned by Bank Respublika JSC (51 percent). The company has been operating since August 28, 2007 and has a perpetual licence for the provision of 25 voluntary types of insurance services.
The official exchange rate on June 25 is 0.7843 AZN / USD.
Edited by CN