Azerbaijan, Baku, April 15 (Trend, A. Akhundov)
The insurance market of Azerbaijan is strongly related to imputed insurance (a kind of voluntary insurance, which is legally not compulsory but is indispensable for credit receipt) and thereby very sensitive to littlest oscillations at the bank crediting market, Mamed Sadikh Mamedov, Board Chairman of the International Insurance Company (IIC), told Trend.
According to him, the insurance market and the banking market form the basis of Azerbaijan's financial system with the insurance sector strongly lagging behind from the banking one.
"Insurance market growth in a pre-crisis period was thanks solely to imputed and compulsory insurance development", Mamedov said.
According to him, mortgage property insurance currently covers the lion share of the entire insurance operations in Azerbaijan. Note is that 80 percent of the most popular kind of insurance in Azerbaijan - insurance of cars - are imputed.
"Though the level of insurance culture of either physical persons or legal entities of Azerbaijan grows, it continues to remain extremely low. This strongly restrains sales in the segment of voluntary, non-imputed insurance", Mamedov said.
According to him, insurance market supply is much ahead of the market demand not because there are too many insurance companies competing each with other but because of the very nature of products they offer.
"The bigger part of the offered kinds of insurance still remains unclaimed by the population. At the moment, of utmost demand are property insurance, medical insurance, insurance of responsibility, insurance of cargoes, and compulsory insurance of civil liability motor funds", Mamedov said.
According to the Ministry of Finance's State Insurance Supervision Service, following the results of 2010, premiums of the country-operating insurance companies totaled AZN 155.59 million whereas payments were equivalent to AZN 53.83 million. Last year, insurance premiums and insurance payments were down 4.73 percent (AZN 163.31 million) and up 1.43 percent (AZN 53.07 million), respectively, from the previous year.
ICC Board Chairman says compulsory insurance of civil liability motor funds is developed in the country and is expected to develop to a larger extent due to the new Law "On Compulsory Kinds of Insurance" -to appear soon - that envisions radical change of this segment of the market and a substantial growth of both insurance premiums and insurance coverage.
At its meeting on Friday, the Committee on economic policy of the Parliament of Azerbaijan examined the bill "On Compulsory Kinds of Insurance" in the second reading.
The bill regulates the following four kinds of compulsory insurance: real estate insurance, compulsory insurance of civil liability motor funds, insurance of passengers, and compulsory insurance of civil liability real estates.
The market of life insurance also begins developing in the country, according to Mamedov.
"The market of life insurance is promising, not to mention that it is compulsory. However, with the experience of CIS countries in account, it is expected that the segment of cumulative life insurance will be a matter of secondary importance on the market", Mamedov said.
There is a total of three companies specialized in life insurance - Atesgah Heyat, Qala Heyat and Pasha Heyat - operational in Azerbaijan at the moment.
The State Insurance Supervision Service currently examines several proposals envisioning establishment of life insurance companies.
The official rate on April 13 is 0.792 AZN/USD.