Azerbaijan hopes insurance share in GDP to reach 1 percent
Azerbaijan, Baku, Sept. 29 /Trend, A.Akhundov/
Azerbaijan's Ministry of Finance aims to bring the share of insurance in GDP to one percent, Deputy Finance Minister Azer Bayramov told Trend on Thursday.
"We'll see if we can reach it by the end of the year as the country's GDP is growing," said Bayramov.
In January-August 2011, it reached 0.6 percent.
According to him, the entry into force of a law on compulsory insurances will play an important role in achieving this goal."
After the introduction of new types of compulsory insurance in Azerbaijan, the growth rates of the insurance market will continue to exceed over the rate of GDP growth, Deputy Finance Minister Azer Bayramov told reporters earlier.
"Over the past seven years, Azerbaijan's GDP grew three times, the amount of insurance premiums of all companies - 3.7 times," said Bayramov.
According to him, given the slowdown in the GDP growth, increasing the share of the insurance market in Azerbaijan's GDP to two to three percent in the medium term is quite real.
"It would be desirable to achieve this level for two or three years, but I think that the market will reach this level in the medium term," said the official.
According to the draft of long-term economic development strategy of Azerbaijan in 2011-2025, prepared by the Economic Development Ministry, the share of insurance fees in the country's GDP will be increased from 0.5 percent in 2009 to at least three percent in 2025. In 2010, this figure fell to 0.37 percent of GDP.
According to the strategy draft, the amount of insurance market in 2009 totaled $215 million, and by 2025 is expected to reach $3.108 billion.
According to the State Insurance Supervision Service under the Finance Ministry of Azerbaijan, the total amount of premiums in 2010 amounted to 155.59 million manat ($195 million at the exchange rate as of the end of last year, 0.7979 AZN to 1 USD).
Accordingly, upon government forecasts, the insurance market will grow 16 times by 2025.
To achieve these objectives, the Ministry considers it necessary to increase the level of capitalization of insurance companies, expand the range of products and services (reinsurance, life insurance, etc.), as well as create a special fund for insurance in the agricultural sector, etc.
According to the schedule of capitalization of insurance companies, by 2013 the minimum level of capital for insurers was set at 5 million manat, reinsurers - 10 million manat.
Official exchange rate on Sept. 29 is 0.7868 AZN/USD.