BAKU, Azerbaijan, June 17
By Yusif Aghayev – Trend:
The Central Bank of Azerbaijan (CBA) is preparing a package of fundamental reforms aimed at recovering the insurance market in the country, the Azerbaijan Insurers Association (AIA) told Trend.
“The functions of the insurance market regulator were transferred to the CBA in November 2019, when the Financial Market Supervision Chamber was abolished by the decree of President Ilham Aliyev. Over the period that has elapsed since that time, negative trends in this sector were quickly identified and the action plan for its recovery was developed,” the AIA said.
“The main objective of the action plan is ensuring the development of the insurance market in Azerbaijan, applying international experience, as well as bringing all business processes in line with international standards. Carrying out its activities, the CBA seeks not only to protect the rights of consumers, but also to ensure the sustainable development of insurance companies,” noted the AIA.
“As known, the most important current factor hindering the development of the insurance market in Azerbaijan is the lack of knowledge among employees in this field, as well as the low level of trust of the population and business communities in the insurance industry itself. As a consequence, there was an urgent need to deepen the insurance culture and increase the financial literacy of the population during recent years,” the AIA added.
“For many years, the CBA has done a lot to increase the population’s financial literacy. Currently, most people already have detailed information about banks and banking products. Continuation of this policy in the insurance sector is one of the main goals set by the CBA. In order to inform and educate the population in the field of insurance, experts and specialists regularly appear on television and publish interviews,” noted the AIA.
“The CBA has identified a number of issues that need to be addressed for the development of the insurance sector. First of all, this is digitalization, the translation of the majority of business processes into electronic format, if possible. This will help optimize the activities of insurers, save both costs and time of the insurance companies themselves and their customers,” the AIA noted.
“For many years, the CBA has been introducing electronic processes in the banking sector. Currently, the regulator is preparing a number of projects in the direction of creating an electronic system in the insurance sector to meet the most urgent needs of demanding customers,” said the AIA.
“Poor corporate governance is the main obstacle for growth both in the insurance industry and in all other business areas. The most pressing issue is the lack of experienced staff. Inexperienced staff is the main factor that slows down the development process of insurance companies, and sometimes makes it impossible,” stressed the AIA.
Because of this, the CBA is negotiating with international organizations to conduct trainings and courses in the near future, ensure the development of the insurance sector and prepare specialists for work in this area, added the AIA.
“The current economic situation requires amendments to insurance legislation and its adaptation to modern realities. In this regard, with the participation of insurance companies, under the guidance and control of the CBA, a package of proposals was prepared, which was submitted to the relevant authorities. Thus, a proposal plan was developed on adapting insurance products to current requirements, on determining insurance premium limits, defining new methods for calculating premium coefficients (bonuses and maluses), preventing the payment of excessive commissions, etc.,” said the AIA.
After transferring the authority of the insurance market regulator to the CBA, thanks to its clear supervision of the activities of insurance companies, the insurance premiums increased by 17 percent in the first 4 months of 2020 compared to the same period of 2019, the AIA noted.
The CBA also ensures the smooth operation of hotlines to protect consumer rights and quickly solve problems in the insurance industry.
Presently, 21 insurance companies and one reinsurance company operate in Azerbaijan.