BAKU, Azerbaijan, May 21
By Yusif Aghayev – Trend:
The bankruptcy of Azerbaijan’s Standard Insurance company, the process of which has been launched recently, may affect the financial stability of the Azerbaijani Compulsory Insurance Bureau, Chairman of the Supervisory Board of the Azerbaijan Insurers Association Azer Aliyev told Trend.
“The company had big problems with the capital, starting from the period when the parent bank of the company, Standard Bank, was declared bankrupt in October 2016,” the chairman added.
“The sales volumes decreased by more than a third,” Aliyev said. “Many employees, including top-level and middle-level managers, left the company. There were problems with the payment of insurance claims.”
“The company was unable to overcome the difficulties, accumulate the capital to the required level and resolve the issues related to the asset liquidity,” the chairman said.
“Unfortunately, the change of management, the attempts to improve the company did not bring the expected result,” Aliyev said. “The expected result was not achieved despite the fact that according to the results of the first quarter of 2020, the company ranked 11th among domestic insurers in terms of collecting the premiums and collected 3.4 million manat [$2 million], thereby demonstrating high growth dynamics compared to the same period of last year, namely - 1.8 times.”
“Another important problem is that the compulsory insurance portfolio of the company is quite big, reaching at least seven million manat ($4.1 million) in the equivalent of the collected insurance premiums,” the chairman said.
“In accordance with the current law, if the insurer, due to insolvency, cannot fulfill the obligations upon the relevant compulsory insurance contracts in connection with the damage caused to the health and (or) property of the insured, a compensation is issued by the Compulsory Insurance Bureau (Section 32 of the law on obligatory types of insurance),” Aliyev said.
“Overloading of the Compulsory Insurance Bureau by such a big burden on the obligations of insurance contracts that make up Standard Insurance company’s portfolio, given an increase in loss ratios on mandatory types, may affect the financial stability of the Bureau,” the chairman said.
Standard Insurance OJSC was established in 2002 as a full-fledged insurance company operating in the non-life insurance segment.
Today, the company has a license to carry out four compulsory and 24 voluntary types of insurance. As a result of the activity in 2019, the company collected the insurance premiums in the amount of 14.06 million manat ($8.3 million) and paid insurance claims in the amount of 5.4 million manat ($3.2 million), ranking 14th among domestic insurers.
In accordance with Art. 4, 109.1.2, 118.1.1 and 118.1.2 of the Law on Insurance Activity of the Republic of Azerbaijan upon the decision of the Board of the Central Bank of the Republic of Azerbaijan dated May 19, 2020, the license for carrying out Standard Insurance company’s activity was canceled, a temporary administrator was appointed in the company and a statement was sent to the court to initiate the company’s bankruptcy proceedings.
Today, 21 insurance companies and one reinsurance company operate in Azerbaijan.
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