Azerbaijan, Baku, Oct. 26 / Trend A. Akhundov /
The measures of the State Insurance Supervision Service under the Ministry of Finance to increase the requirements for the minimum total capital of insurance companies are correct. But there is a need for their postponement, Feyruz Novruzov, Chairman of the Board of International Insurance Company, said.
"Many people took a new law "Insurance", providing significant changes compared to the previous law, with some caution. But the time showed that the law itself and the approved rules promoted the development of the insurance market. It became clear that all this also has its own economic necessity. It was in our favor, " Novruzov said.
According to the approved minimum capital requirements of insurance companies, as of January 1, 2010 the capital of insurance companies must be brought up to 2 million manat, reinsurance companies - 4 billion manat, as of January 1, 2011 - up to 3.5 million manat and 7 million manat, as of January 1, 2012 - 5 million and 10 million manat respectively.
Novruzov said the implementation of measures according to the planned schedule may lead to undesirable consequences.
"The incomes of most insurance companies reduced under the influence of the global financial crisis. It naturally led to a reduction in their assets. When calculating the total capital, the assets are a defining feature. It decreased the number of companies on the local market. In such circumstances, the continuation of measures on capitalization can lead to the fact that many companies will face with very serious problems to fulfill these requirements in 2011.
"As we know, about 4-5 companies may comply with the requirements for the capitalization on the local market today. Therefore, the insurance companies decided to appeal on behalf of the Association of Insurers to the State Insurance Service with a proposal to postpone the mandatory requirements to the amount of the total capital for two years, as well as revise the accounting system of investment capital and fixed assets. At pesent, the State Insurance Service is considering our proposals, " Novruzov said.
Namik Khalilov, the head of the State Insurance Supervision Service, told Trend that Azerbaijani Insurers Association, where the International Insurance Company is a member of the Supervisory Board, applied to the Finance Ministry with a proposal to amend the schedule of capitalization of insurance companies. The insurers propose to delay bringing the capital to this level for two years - until 2013. Specific requirements will be adopted by late 2010, he said.
However, strong and serious companies must remain on the market, he said.
"It is correct to postpone these requirements for the companies to recover and stabilize. We need a respite. Afterwards, strong and serious companies must remain on the market, that is, those who do not compromise the image of the insurance market in the country. Weak companies must either strengthen independently or unite with others. A consumer must not have a negative opinion about the entire insurance market, " Novruzov said.
On Oct. 26, the official exchange rate is 0.801 manat to $1.