Azerbaijan's money market Azerbaijan, Baku, 2 August / Trend, A. Akhundov /
The dynamic development of Azerbaijan's insurance sector provides a good basis for the active participation of insurance companies in the country's money market, the head of the Baku Interbank Currency Exchange (BBVB) Farhad Amirbeyov says.
Efforts to attract insurance companies to the money market was launched in January 2012. To date, an agreement has been reached with insurance companies Atəşgah Sığorta, Buta Sığorta and Ata Sığorta as well as the only reinsurance company in the country AzRe. Currently, the exchange continues to negotiate with other participants of the insurance market.
According to Amirbeyov, at the initial stage, insurance companies join the e-trading system (BEST) only as creditors.
"We have been observing the evolution of the insurance market for about the last five years. Qualitative changes began in the market in 2011. In 2012, the fees of the insurance market grew by 60 percent, and a 30-35 percent increase is expected this year. Estimates of the companies' premiums over the next few years, the market can achieve the target of two billion manat. This is certainly an impressive rate of growth, and we believe that the insurance industry is already capable of accumulating fairly substantial financial resources, some of which may be directed to the domestic money market. We have asked our commercial banks to think about this promising trend, that is, over the work with a whole class of new clients with excellent growth potential and increasing "appetite" for new financial instruments," Amirbeyov told Trend.
According to him, the banks are certainly interested in the emergence of a new secondary liquidity channel .
"Working with financial institutions is much more convenient and cheaper for the banks than with the population. There is no need to conduct a public campaign, no need to expand the network of points of sale in the form of branches and electronic products. The process cost is very low, and the benefits are obvious. Using the BEST trading system means being technologically advanced and comprehensible to the counterparts. The benefit for the insurance companies is that they have access to the wholesale banking market and can expect to get the best possible price. Insurance companies will be able to participate in BEST only as the banks' creditors," Amirbeyov said.