Compulsory life insurance market may be covered by 70 percent in Azerbaijan by late 2011

Business Materials 18 July 2011 12:56 (UTC +04:00)

Azerbaijan, Baku, July 18 / Trend A. Akhundov /

At present, about 500,000 people have been insured on compulsory insurance against disability, resulting from occupational diseases and accidents at work in Azerbaijan, the Chairman of the Atesgah Heyat Board Akbar Madatli said.

The use of the labor insurance service began in December 2010 with about 14,000 enterprises insuring workers.

At present, the share of compulsory life insurance has reached 90 percent.

According to official statistics, as of June 1 there have been 1.362 million hired employees and about 400,000 registered private people dealing with entrepreneurship.

There are three life insurance companies that are licensed to provide services of this kind in Azerbaijan - Atesgah Heyat, Qala Heyat and Pasa Həyat.

"Only our company [Atesgah Heyat] insured more than 200,000 employees", he said. "We have concluded more than 6,000 contracts in the first half of the year."

Deputy Chairman of Pasa Heyat, Niyaz Ismailov, said that about 160,000 people have become company clients.

"We have already signed contracts with about 300 legal entities on obligatory accidental insurance", Ismailov said.

Chairman of AzRe Reinsurance sole reinsurance company's board and the Founder of Qala Heyat, Vusal Abbasov said that about 7,500 business entities became clients of Qala Həyat.

He could not relate the exact number of physical entities who are clients of the company for this type of insurance.

Despite the fact that Pasa Heyat is behind most life-insurance companies in terms of clientele, legal entities are insured with compulsory insurance against disability in the workplace. In terms of fees, the company is a leader in the Azerbaijani insurance market.

According to the State Insurance Supervision Service under the Azerbaijani Ministry of Finance, Pasa Heyat collected premiums amounting to 6.218 million manat in the first half of the year, taking 43 percent of the life insurance market and 6.33 percent of the total insurance market in the country. Atesgah Heyat Company collected 4.613 million manat. About 31.9 and 4.69 percent fall to the company. Qala Heyat collected 3.542 million manat. About 24.5 and 3.6 percent fall to this company.

About 0.6 percent of the life insurance market (worth about 85,000 manat) is given to portfolios of life-insurance companies which provide similar services before a three-year moratorium expires in late March this year. The company indicates that only specialized companies deal with life insurance.

The total amount of premiums for voluntary life insurance amounted to 1.52 million manat. The Azerbaijani insurance companies' premium for compulsory insurance and disability, resulting from occupational diseases and accidents at work, was 12.938 million manat in the first half of 2011.

The potential market for compulsory insurance is estimated at about 30 million manat. The existing three companies have covered almost half of the market in six months.
However, there was a sharp slowdown in fees for compulsory insurance against accidents in June.

June fees exceeded that of January-May by 8.35 percent, while fees in May increased by 37.12 percent compared to January-April. In April fees rose by 46.13 percent compared to January-March. In March the figure exceeded threefold compared to January and February.

The chairman of the insurance company Qarant Sıgorta Vagif Hasanov said that the peak level of fees of Azerbaijani life insurance companies for compulsory insurance fell behind.
"First, insurance companies began insuring employees in large companies", Hasanov said. "At present, small companies are dealing with this."

The chairman of Atesgah Həyat company Akbar Madatli said that three companies will cover no more than 70 percent of the potential market of compulsory life insurance by late 2011.

"We expect to get 30 percent of the total life insurance market," Madatli said.
Madatli said that these companies risk losing a part of the market after new life insurance companies are established.

"A policyholder may apply to another insurer at any time by breaking the contract and sending a written notice 30 days in advance," Madatli said. "Each company fights for its customers. We will try to keep our clients in the future. We must adhere to the quality standards while rendering the services, by making payments on time and maintaining services at a proper level. Of course, there are some political points on which they can apply to one or another insurance company. But that does not mean it is a very small amount? Basically, the quality of service plays a key role."

At present, the State Insurance Supervision Service is considering appeals for establishing a life insurance company. The appeals were received from AzSıgorta, Alfa Sıgorta, Ata Sıgorta, and Standard Insurance. The International Insurance Company and "Azerbaycan Senaye Sıgorta" have similar plans.