Crisis Can Affect Azerbaijan’s Insurance Market
Azerbaijan, Baku, November 18/ Trend , corr U. Ismayilova/ "Toughening terms of granting credits for purchase of cars by the National Bank of Azerbaijan will reduce by half premiums of insurance companies, who mainly focus on this type of insurance," Nofal Rzayev, director general of Pasha Sigorta said.
"The current situation which causes damping prices and rise in the number of complaints, can lead to lost of confidence to entire insurance market, but not only to those dealing with that kind of insurance," Rzayev said.
According to the Ministry of Finance of Azerbaijan, in January to September, premiums from car insurance totaled to AZN 48.2mln with payments totaling to AZN 14.6mln. The total amount of premiums of 28 insurance companies operating in the country made up AZN 147.7mln and payments - AZN 40.4mln.
The insurance experts say the most acceptable interest rate for long-term car insurance makes up not less than 4%. But there are companies in Azerbaijani market who insure a car at 1.5% a year or 6% for five-year term. These companies will, of course, face serious problems, Rzayev said.
"The reduction in terms of car crediting will prompt a drop in the revenues of banks and insurance companies which can lead to a chaos," Rzayev added.
There are positive sides as well in current situation -working out appropriate tariff policy, development of other types, etc. In other words, insurance companies will be interested in diversification of portfolio which is integral to the insurance business.
National Bank of Azerbaijan (NBA) ordered bank sector of the country to strengthen control and toughening terms of granting credits for purchase of cars. Banks, who are actively involved in car crediting, had to examine terms of financing and some of them suspended crediting completely.
Pasha Sigorta, part of Pasha Holding, offers its services to cooperative and individual clients on 30 types of insurance. The authorized capital stock of the company totals to $9 million, total capital - AZN 11.5mln. In January to September, company collected premiums worth AZN 6.6mln with payments totaling to AZN 4.98mln.
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