Baku, Azerbaijan, Sept.1
By Ilaha Mamedli - Trend:
Cuts to the growth rate in the Azerbaijani insurance market will continue until the end of 2014, the expert in the field of insurance Khayal Mammadkhanly told Trend.
"The insurance market is developing a one-sided focus on car insurance, and some types of compulsory insurance like a few years ago," Mammadkhanly said.
"The trouble is that compulsory insurance is not well developed," he added. "The compulsory insurance of passengers hasn't seen any payments 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 Mammadkhanly underlined, "All these factors have weakened the insurance market."
For the development of voluntary insurance the market doesn't offer a sufficiently wide range of products as well as the new insurance services, there are also problems in the field of working with clients, obtaining reimbursements for insurance claims, etc., he noted. And these factors affect the overall pace of development of the market.
Mammadkhanly thinks insurance companies should try to get people to buy insurance services on a voluntary basis, and that 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 the conducting of 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, "At present, 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 mechanism of control is created and an even greater increase in this market can be expected over time. Ministry of Labor and Social Protection has implemented hard work on gaining control over contracts of employment 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: Pasha Heyat, Atashgah Heyat and Gala Heyat collected 63.5 million AZN for all types of life-insurance in January-July 2014, which is a nearly 56 percent (22.83 million AZN) 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.
There are 28 insurance companies in Azerbaijan.
The official exchange rate for August 30 is 0.7844 AZN / USD.