Transmission Period to Separate Life Insurance to be Introduced in Azerbaijan
Azerbaijan, Baku / Trend corr . I.Khalilova / Azerbaijani insurance companies which insure life cannot render services on NonLife insurance in compliance with international experience, stated head of the Department on Insurance Supervision of the Finance Ministry Namik Khalilov on 18 December.
Such a statement was included in the bill on Insurance Activity, but transmission period of three years are offered. Although, there was supposed to introduce five years term during discussion of the bill. However, the Ministry did not pass the proposal as separate companies should be engaged in this activity.
According to Khalilov , the current life insurance market of Azerbaijan is small and companies engaged in this sphere are interested in development of the sphere in the country.
The insurance activity should be implemented separately, as long-term reserves are formed in life insurance, but short-term agreement is signed in another insurance of life.
Although the Azerbaijani legislation includes three years of transition period companies will be imposed by additional demands. Insurers engaged in two types of insurance activity must have capital in two-fold sum in compliance with minimum demands. The minimum demand by 1 January 2008 amount to AZN 800,000, such companies should form their authorized capital in amount of AZN 1.6 mln , Khalilov said.
"As additional risks need additional material guarantees, it will be an obligatory demand," khalilov added.
Today, most companies of the country have permission to insure life. However, some of these companies are really engaged in this sphere. Some measures are planning to take in order to stimulate this sphere of insurance in the country.