Azerbaijan, Baku, Feb. 1 / Trend A.Akhundov /
Differentiation of regulatory requirements for the total capital of insurance companies in Azerbaijan is expected following the introduction of Solvency II standards.This was stated by the head of the State Insurance Supervision Service under the Ministry of Finance, Namik Khalilov.
Under current legislation starting January 1, 2013, the capital of insurance companies in Azerbaijan should not be less than five million manat and of reinsurance companies 10 million manat.
From January 2011, the minimum capital of insurance companies was set at three million manat and reinsurance companiesat six million manat. Since early 2012 it was four million manat and eight million manat respectively.
"Today, we have the identical approach to all insurance companies. Solvency II international standards which come into force in the EU in January 2014, provide for different approaches to insurance companies depending on the size and structure of their portfolios. Aggregate capital requirements may vary depending on these factors. Everything is based on a risk assessment of the insurance portfolio, portfolio investment and so on. Special requirements are set for each company depending on these factors. We are exploring the possibility of applying these standards in Azerbaijan in future," Khalilov said.
The new rules will come into effect from January 2014 and will operate in 30 European countries. Solvency II is based on three pillars: quantitative requirements such as capital requirements, quality requirements for risk management and regulation by the regulatory bodies, as well as requirements for reporting and disclosing the requirements.
The EU created a modern, risk sensitive basis for regulating insurance as a third Solvency II directive. It is planned that the new structure will have a significant impact and change insurance conditions in Europe. The European insurance market and in particular the European Committee of Insurers and the Forum of Executive Risk Managers support the new conditions.
There are 28 insurance and one reinsurance company in Azerbaijan.