Azerbaijan, Baku, 17 November / corr Trend U.Ismayilova / Toughening of terms of lending for purchase of automobiles at the order of National Bank of Azerbaijan (NBA) will reduce volume of premiums of Azerbaijani insurance market by 15%, Jamil Malikov, CEO of MBASK insurance company and simultaneously CEO of Association of Insurers.
"Automobile crediting is one of the most developed spheres, bringing large volumes of payments, in Azerbaijan," Malikov said.
According to the Azerbaijani Ministry of Finance, in January to September, premiums on automobile crediting totaled AZN 48.2mln with payments of AZN 14.6mln. Total volume of premiums from 28 functioning insurance companies totaled AZN 148.7mln with payments in the amount of AZN 40.4mln.
"Although income was reduced, the fact has also positive features, like reduction of risks for insurance companies. Earlier, the company can suffer damage upon insuring pawned automobile, as prices and expenses for automobile's repair were the same. However, the expenses increase by several times while a level of inflation and prices in the country increasing," Malikov said
"Reduction of dependence on this type and development of other types on insurance can be another and important influence of reduction of term of automobile crediting on the country's insurance market," Malikov said.
"Insurance companies will have to reconsider level of their expenses, reduce expenses at the most and reconsider their investment program," Malikov said.
NBA gave the order to the country's bank sector on intensification of control and toughening of terms of granting of credits for purchase of automobiles, a source in bank circles said earlier. Having given the order, NBA tries to reduce risks in Azerbaijani banks and protect them from impact of global financial crisis. The bank, taking the most active part in automobile crediting, are compelled to reconsider terms of financing, and some banks even suspended crediting. One of demands of NBA was to reduce the terms of granting of loans from five to three years at increase of primary payment, paid by customer, from present 20% in some banks. NBA offers reduction of interest rates on credits for automobiles to 15% in connection with reduction of rate to 10%.
MBASK, operating since 1992, renders 29 types of insurances services, with 4 of them compulsory. The authorized capital of the company has totaled AZN 2mln. The European Bank for Reconstruction and Development (EBRD) purchased 30% of MBASK in January 2005.
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