Insurance chief: 2011 to become a year of further growth for Azerbaijani insurance market

Business Materials 24 January 2011 17:16 (UTC +04:00)

Azerbaijan, Baku, Jan. 24 / corr Trend U.Ismayilova /

The year of 2010 has become a year of adaptation for the Azerbaijani insurance market after the global financial crisis, Namiq Khalilov, head of the State Insurance Control Service at the Azerbaijani Ministry of Finance believes.

"Well-known developments in the fiscal markets in 2008-2009 led to cut in traditional sources of insurers' activities and the companies had to adapt to new terms in these conditions," Khalilov believes.

As a result insurance companies have to design new products and seek new clientele.

Despite difficulties, several companies could adapt to new services and even they achieved growth in business in 2010, while there are companies which could not get adapted and their indices reduced seriously, Khalilov said.

At the same time, size of insurance claims increased inconsiderably at the local insurance market in 2010. In general, payments are growing in higher rate than premiums and it indicates to increase of share of payments in total premiums.

According to Khalilov, 2010 was remarkable for the Azerbaijani insurance market due to adoption of a law on Obligatory insurance of loss of ability as a result of professional diseases and accidents in production.

"The legislation is of great social significance," Khalilov thinks.

The country has faced problems with social security of employees due to transition from the planned state economy to market relations.

"Employee rights were left undefended due to absence of financing sources. A commitment to pay compensation to employees was imposed to a new owner as a result of bankruptcy, company's transition to another owner and in the process of privatization. Many problems came out due to absence of an insurance mechanism," Khalilov said.

The new legislation offers financial provisions, enabling the employer to ensure compensation payment to employees, and not to be turn out in critical financial situation, Khalilov believes.

The new legislation will better the status of employers. Though many believe that the legislation was adopted in the interests of employees, it much more protests the employer enabling to safeguard against possible indefinite expenses while making inconsiderable forecasts expenses.

The year of 2011 will be a year of further increase of the insurance market.

"The market is making signals of its speeding up," Khalilov said. "Premiums of Azerbaijani insurance companies are expected to reach 180-200 million manat as of 2011." 

One of the key tasks for this year is holding work on insurance awareness and propaganda, he added.

According to Khalilov, the State Insurance Control is preparing a campaign targeting consumers. It includes advertisement wheels and video instructions, giving advises on conduct in insurance cases. Furthermore, a special website is designed to propagate insurance and insurance awareness of consumers.

The total amount of premiums of the all insurance companies hits 155.59 million manat and payments hit 53.83 million manat. The insurance charges fell by 4.73 percent (163.31 million) and payments - by 1.43 percent (53.07 million manat).