Azerbaijani Insurers should be Ready for 50% Drop in Collections: Experts

Business Materials 7 November 2008 14:35 (UTC +04:00)

Azerbaijan, Baku, 7 November/ Trend , U. Ismayilova/ Azerbaijani insurers should examine their strategic plan for 2009 due to the global financial crisis and be ready for 50% drop in collections, experts at Financial, Economic Studies and Consulting LTD said.

According to the experts of the company, consequences of decisions of entrepreneurs and top-managers which cause bankruptcy of insurance companies should be taken into consideration.

The experts of the company who have studied the market concluded that car insurance which accounts for greater proportion of retail insurance market, will suffer most in the coming years. Rise in this segment is possible only due to the demand for cars. But at the moment rise is hindered by drop in crediting and rise in credit rates.

Financial crisis can affect re-insurance of large risks in foreign companies that can go bankrupt, experts say.

In spite of current situation, a small number of companies, pursuing dangerous policy because of damping and rise in administrative and operational expenses, will be affected by crisis.

In order to get out of a crisis with less damage, insurance companies must withdraw their assets from banks with risks, from constantly falling market of securities and to determine risks which is vital to insurance activities.

"Crisis is a period when mistakes cost three times more and some of them lead to collapse of a company," experts say.

There are 28 insurance companies and on ere-insurance company in Azerbaijan. According to the Ministry of Finance, in January to September, insurance companies collected AZN 148.7mln with payments totaling to AZN 40.4mln.

The correspondent can be contacted at: [email protected]