State insurance supervision agency: Tax incentives contribute to development of life insurance in Azerbaijan
Azerbaijan, Baku, April 21 / Trend I. Khalilova /
The Azerbaijani Ministry of Finance expects that at least 2-4 specialized life insurance companies will appear on the insurance market of the country by late 2010 - early 2011, the state insurance supervision agency head under the Ministry of Finance, Namik Khalilov said.
"The emergence of specialized companies will give impetus to this line of insurance. We expect to see growth in premiums for life insurance this year compared to last year. This process will be more active from 2011," Khalilov said.
"The emergence of specialized companies will give impetus to this line of insurance - Khalilov said. - Already this year we expect to see growth in premiums for life insurance, compared with last year, but next year this process will have more active."
Today, there were no official appeals to the Ministry to establish life insurance companies. But interest in this area of insurance is already increasing. [Creation of separate companies on life insurance is provided by the law "Insurance activity".] Today, one company - Atesgah Heyat, established by Atesgah Sigorta operates on the market.
"They express desire and interest for the establishment of such specialized companies in an informal manner. But those actively interested in this issue are familiarized with the law", the agency said.
Insurance companies have a three-year period for completion of service under the contracts concluded for life insurance in accordance with the law "Insurance activity", which entered into force in March 2008. New contracts for this type of insurance can be signed within separate structures, created exclusively for this purpose.
At present, the share of life insurance in the insurance market in Azerbaijan is less than one percent.
"The development of life insurance is very complex. The experience of other countries testifies about it. When this mechanism is put into operation, it is growing rapidly. Taking into account that life insurance is a long term, the person who signed the treaty for many years pays the premiums, " Khalilov said.
This type of insurance represents the effect of "snowball". Premiums for life insurance will exceed the volume of Non-life insurance, he said.
"The share of premiums for life insurance is on average 55-60 percent of total premiums in Western Europe or other countries with developed insurance markets. I think that such a trend will occur because tax incentives for savings insurance agreements (for employers, hysical entities) have been used in the country, " Khalilov said.
According to the experience of other countries, the use of the mechanism of life insurance began with the tax benefits. In the first phase they were quite substantial. As far as the market develops, benefits reduced to zero.