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Azerbaijani Insurance Companies’ Capitalization Rate Should be Raised: Market Participant

Business Materials 27 October 2008 15:16 (UTC +04:00)

Azerbaijan, Baku, 27 October / Trend , corr. U.Ismayilova /The capitalization of Azerbaijani insurance companies experiences law rate and exemption certain share of income from tax, which is directed to capitalization, will have a positive affect on insurance companies, Nofal Rzayev, the General Director of the Pasa Sigorta company, said.

"Now, the highest authorized capital rate amongst leading players is AZN 10mln in Azerbaijan, but according to European experts, it should equal AZN 30-40mln for normal functioning of insurers," Rzayev said.

Azerbaijani insurance companies need the minimum authorized capital on AZN 20mln or AZN 25mln rate for normal insurance activity and to insure largest risks not entering the re-insurance market so frequent, like it happens today.

"This is a needed measure that the Government should take, which will develop Azerbaijan's insurance market," Rzayev said.

Last week the Parliamentary Commission on Economy Policy discussed the proposals on release of Azerbaijani banks, insurance and re-insurance companies from 1 January 2009, from tax paying on the share of incomes, which has been directed to raise capitalization rate. The key goal of the bill is to accelerate the financial development rate, raise quality of services in banks and insurance sector, and stimulate the raise of companies' capitalization rate.

The income tax is 22% in Azerbaijan. There are 45 banks, 28 insurance and one re-insurance company in Azerbaijan. By the Azerbaijani Finance Ministry, In Jan-Sept 2008, companies have collected AZN 148.7mln premiums with AZN 40.4mln payments.       

Under the scheduled on authorized capital requirements , which was confirmed by Finance Ministry, the capitalization rate of Azerbaijani insurance companies since 1 January 2009, must be at AZN 1mln rate and AZN 2mln for re-insurance companies.

Pasa Sigorta has been operating in Azerbaijan since March 2006. The company renders 29 types of insurance. In 2007 the company received certificate from Moody International Certification Services ISO 9001:2000. As for Jan-Sept 2008, Pasa Sigorta has collected AZN 6.56mln premiums with AZN 4.98mln payments.

The correspondent can be contacted at: [email protected]

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