BAKU, Azerbaijan, March 17
By Yusif Aghayev – Trend:
Current global challenges, such as the threat of the spread of coronavirus and falling oil prices, will be unable to greatly affect the Azerbaijani insurance market, Azerbaijani expert in insurance Parviz Guliyev said, Trend reports.
“The Azerbaijani insurance market will not be affected greatly despite the sad forecasts for the global insurance markets,” Guliyev added. “In accordance with the forecasts of Bloomberg experts, on average, the world economy will lose about $12.7 trillion, about 6-7 percent of this amount will account for the insurance sector.”
However, the expert stressed that it is necessary to take into account that the Azerbaijani insurance market is quite limited, its share in the country's total GDP is less than one percent, while the share of insurance in GDP is 7-10 percent in European countries and the US (in the United kingdom - almost 12 percent).
“The main losses incurred by insurers in terms of the economic crisis are those associated with bankruptcy risks, the share of which is minimal in the portfolio of Azerbaijani insurers,” Azerbaijani expert in insurance Ilkin Ibrahimov said.
“The threat of the spread of coronavirus may cause damage, greatly reducing fees in the travel insurance segment due to a sharp decrease in the number of trips of Azerbaijani citizens to foreign countries,” Ibrahimov said. “However, fees in this segment make up less than one percent of the total premiums and cannot greatly affect the situation.”
In the current situation Guliyev recommends insurers to diversify their portfolios and make investments in safe assets as while reducing the collection of insurance premiums the most effective way to maintain the financial stability of the insurance company is to get the right direction for investments.
Azerbaijan’s insurance companies collected insurance premiums in the amount of 681.1 million manat ($400.6 million) in 2019, which is 46.7 million manat ($27.4 million), or 6.4 percent less compared to 2018.
At the same time, fees in the segment of compulsory insurance greatly increased up to 224.6 million manat ($132.1 million), demonstrating an increase of 32.8 million manat ($19.3 million) or 17 percent.
Presently, 22 insurance companies and one reinsurance company operate in Azerbaijan.