Insurance companies' dependence from auto insurance hampers development of market in Azerbaijan

Azerbaijan, Baku, Oct. 6 / Trend A. Akhundov /

The cooperation of many insurance companies, mainly, with the banking sector hampers the development of the insurance market, Samir Mustafayev, chairman of Temza Sigorta Qrupu Anglo-Azerbaijani Insurance Company, said.

"Many insurance companies operate on auto loans. It is wrong because there is no market.

Insurance companies are forced to deal with car insurance," Mustafayev said.

Mustafayev said that the cooperation between banks and insurance companies is also necessary, but in case of 10 percent of total premiums.

"There are companies where 80-90 percent of the total fees fall to this type of insurance. There is no profitability," Mustafayev said.

He said that the measures of the Ministry of Finance to increase the minimal level of total capital of insurance companies to ensure their sustainability, are correct. But the increase should be conducted stage-by-stage.

"Small and weak companies that do not adhere to the requirements for capitalization must be closed. The companies that provide good and quality services, need state support. In particular, they should be given time to improve total capital of up to 2 million within more than one year, and gradually, " Mustafayev said.

"The Association proposes to amend the schedule of capitalization. There are some questions about licensing and investment," Khalilov said. We are currently considering these proposals, and believe that there is a need to make some change on these issues. 

Specific requirements will be adopted by late 2010.

According to the approved minimal requirements, the capital of insurance companies must be brought up to 2 million manat, reinsurance companies - 4 billion manat by January 1, 2010, up to 3.5 million manat and 7 million manat respectively by January 1, 2011, 5 million and 10 million manat manat respectively by January 1, 2012.

Samir Mustafayev, Temza Sigorta head said that good staff is required to develop the market of insurance services.

"These problems must be solved at the state level. In principle, our universities have departments of insurance. But graduates are very weak. They need practice," Mustafayev said.

On the other hand, there are more positive aspects than the negative ones on the insurance market.

"But if we want, it will be possible to eliminate these negative aspects. I expect good growth on the insurance market in the future," Mustafayev said.

He said that the law "Insurance activity" acting since March 2008 does not give in to the similar laws in other countries. But the question is how we will adhere to this law.

There are 27 insurance and one reinsurance companies in Azerbaijan.

On Oct. 6, the official exchange rate is 0.8022 manat to $1.

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