BAKU, Azerbaijan, Feb. 18
By Yusif Aghayev - Trend:
Capitalization in Azerbaijan's insurance market is insufficient, insurance expert Shukur Huseynov told Trend.
According to the expert, the total capital of all insurance companies in Azerbaijan is approximately 300 million manat ($176.4 million). The size of paid-up authorized capital of the largest players on the market: PAŞA Sığorta - 50 million manat ($29.4 million), PAŞA Həyat - 40.250 million manat ($23.6 million), and Xalq Sığorta - 46.187 million manat ($27.1 million). The authorized capital of Azerbaijan's only reinsurance company AzRe is 50 million manat ($29.4 million), while the share capital of Swiss Life, a European insurance company, is 700 million euros. This problem limits the potential of domestic insurance companies in risk management, reduces their capacity.
In accordance with the requirements of the current legislation, the minimum size of the authorized capital for insurance and reinsurance companies is five million manat ($2.9 million). That is, if a company intends to carry out both insurance and reinsurance activities, its authorized capital should be at least 10 million manat ($5.8 million).
According to Elman Rustamov, the head of the Central Bank of Azerbaijan, which is currently the regulator of the insurance market, the situation in Azerbaijan's insurance market is generally stable, but there may be some certain problems.
"We will try to revive the insurance market in 2020. We will work so that the insurance sector can cover the risks of both businesses and the public. This will lead to market growth and lower risks. The main condition set by the government is that insurance companies solve problems on their own, and not transfer them to the shoulders of the state," Elman Rustamov said.
Another important problem of local insurance companies is their dependence on the banking sector. It is no secret that the main assets of many insurance companies are placed in their parent banks. As a result, the problems that occurred in the country's banking sector also affected the insurance sector.
However, it is worth noting that certain work was carried out in 2019 to improve this market segment. As a result, the assets of the insurance sector grew by 13 percent, and insurance payments went up by 25 percent, compared to 2018.
This year, a number of measures are envisaged to revitalize activities in Azerbaijan's insurance sector. Both the market regulator, the Central Bank of Azerbaijan, and the Azerbaijan Insurers Association will work on this.
Currently, there are one reinsurance and 22 insurance companies in Azerbaijan.