Azerbaijan, Baku, Oct. 3 / Trend E. Aliyev /
An insurance pool to cover catastrophic risks may be established in Azerbaijan by late 2013, chairman of the Azerbaijan Insurers Association (AIA) Orkhan Bayramov told Trend on Thursday.
"We are currently preparing all legal procedures associated with the creation of a catastrophic pool. It is scheduled to be completed by the end of this year. In case there are delays or other problems, the project development will be completed in the first half of 2014," Bayramov said.
According to him, the insurance companies have already sent the required information to the only reinsurance company in Azerbaijan -AzRe, on whose basis the pool will be created.
"In view of the fact that AzRe carries out reinsurance activity in the market, it does not represent competition for insurers," Bayramov said.
According to him, the corresponding agreement between the companies, the conclusion of which was scheduled for September this year, has not yet been signed.
"This is due to the fact that the process of creating an insurance pool to cover catastrophic risks is a long process that requires coordination of various aspects between all the participants," Bayramov said.
The initial portfolio of the pool is expected to total 600,000-650,000 manats. AzRe will redirect the funds collected in the pool completely for reinsurance abroad and follow up with technical issues. According to international practice, the income of reinsurers constitute from 10 to 20 per cent of the risks transferred to them.
At the initial stage, the pool will involve member companies belonging to the Compulsory Insurance Bureau, as the project is insurance against catastrophic risks associated with compulsory insurance of real estate.
Compulsory insurance of real estate was introduced in the country under a new law 'On mandatory types of insurance' which has been used by the company since December 16, 2011.
Twelve companies are participants of the Compulsory Insurance Bureau: Paşa Sığorta, Atəşgah Sığorta Şirkəti, Standard Insurance Sığorta Şirkəti, AtaSığorta, Xalq Sığorta, AXA MBASK Sığorta Şirkəti, AZSIĞORTA, Alfa Sığorta, the state commercial insurance company Azərsığorta, Meqa Sığorta, İpək Yolu Sığorta and Azərbaycan Sənaye Sığorta.
At present, in accordance with the legislation, five per cent from each premium for compulsory property insurance is designed to cover risks of unforeseen situations. Natural disasters that are covered by compulsory insurance of real estate in Azerbaijan include earthquake, volcanic eruptions, storms, hurricanes, hail, mudflows, floods, downpours and landslides.
There are 28 insurance companies and one reinsurance company in Azerbaijan. All of them are members of the AIA.
The official rate for October 3 is 0,7845 AZN/USD.