Business interruption insurance premiums increase in Azerbaijan
BAKU, Azerbaijan, Feb. 14
By Yusif Aghayev – Trend:
The business interruption insurance premiums sharply increased in Azerbaijan in 2019, Trend reports referring on Feb. 14 to the report of the Central Bank of Azerbaijan (CBA).
In accordance with the CBA report, insurance premiums worth 321,500 manat ($189,117) were attracted for this type of insurance in 2019. At the same time, the fees for this type were practically equal to zero in 2018.
Business interruption insurance is one of the forms of insurance of business risks, which belongs to the class of insurance of the mixed financial risks. The purpose of this insurance is to compensate for damage as a result of business interruption insurance due to the complete or partial stoppage of the enterprise’s activity due to fire, natural disaster or other insured risk.
In accordance with the terms of this type of insurance, the insurer compensates the insured for the damage associated with the loss of income due to a break in production resulting from an insured event, as well as additional costs associated with this event, for example, those associated with the minimization of damage.
As a rule, this type is acquired as an additional option to the main package of property risk insurance.
Despite theoretical advantage of this type of insurance, the current practice of insurance companies’ activity testifies that insurers are very reluctant to deal with insurance of business risks, being extremely careful.
This is stipulated by the general problems of the market development related to the fact that the pace of development of the state and entrepreneurial activity greatly outstrips the creation of a regulatory framework corresponding to the current stage.
The dynamics of the development of insurance premiums for this type of insurance over the past few years in Azerbaijan has been extremely unstable. The fees were almost zero in 2019, then in 2017 they amounted to 9.3 million manat ($5.4 million) while in 2016 - 1.5 million manat ($882.3 million).
In general, the Azerbaijani insurance companies collected insurance premiums worth 681.2 million manat ($400.7 million) in 2019, which is 46.8 million manat ($27.5 million) or 6.4 percent less than in 2018.
Today, 22 insurance companies and one reinsurance companies operate in Azerbaijan.
(1 USD = 1.7 AZN on Feb. 14)