Interest in compulsory real estate insurance growing in Azerbaijan
BAKU, Azerbaijan, June 8
By Yusif Aghayev – Trend:
Numerous fires and natural disasters that occurred in Azerbaijan last year caused great damage to both residents and property of entrepreneurs, Azerbaijan Insurers Association told Trend.
“So, the importance of property insurance has become apparent again,” the association added. “Since December 2019, the insurance companies have taken various steps to increase public interest in compulsory real estate insurance, organized events, prepared information materials and shoot commercials.”
The campaign continued during the first quarter of 2020, which led to an increase in fees on this type by 95 percent in the first three months of this year compared to the same period of 2019, the association said.
The information activity and raising awareness campaign carried out by the Central Bank of Azerbaijan, the Compulsory Insurance Bureau, and the Azerbaijan Insurers Association, played an important role in the positive dynamics of an increase in premiums which is being observed.
After the transfer of powers of the regulator of the country's insurance market to the Central Bank, the insurance sector was assessed and analyzed constantly. For this purpose, a number of events were held in Azerbaijan’s Baku city and districts. The various aspects of insurance in Azerbaijan were widely covered in the media. The insurance experts participated in many TV programs and gave interviews.
As a result of these measures, the positive results were obtained in terms of sales growth in compulsory real estate insurance.
The diagram on share of compulsory real estate insurance in non-life insurance market shows the dynamics of the development of the collection of the insurance premiums (marked in blue) and the payment of insurance claims (marked in red) in the non-life insurance segment from 2016 through 2020:
Share of compulsory real estate insurance in non-life insurance market
”As a result of the taken measures, the share of compulsory real estate insurance of individuals greatly increased, but there were not big changes in this type of insurance of the corporate real estate segment,” the association said. “Taking into account that presently, there is a lot of uninsured immovable property in the country, it is possible to say that compulsory real estate insurance has great potential for development in the market.”
“Although this type of insurance is applied in accordance with the law adopted in 2011, its implementation has not yet been subjected to the strict control,” the association added. “To fully bring the oversight mechanism into effect, it is necessary to make the corresponding changes at the legislative level. One of the main tasks now is to digitalize this type of insurance.”
“Of course, the spread of the coronavirus pandemic negatively affected the entire insurance sector,” the association said. “So far, many awareness raising events being conducted by insurance companies as part of compulsory real estate insurance have been reduced or completely stopped.”
“As a result, a great increase in the number of insurance contracts concluded as part of compulsory real estate insurance as it was expected was not achieved,” the association said. “The progress was achieved at a more moderate pace.”
“Nevertheless, the sales volumes within this type of insurance actively increase this year compared to the previous years,” the experts of the association added.
Today, 21 insurance companies and one reinsurance company operate in Azerbaijan.
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