Baku, Azerbaijan, Dec. 11
By Emin Aliyev - Trend:
The growth of Azerbaijani insurance companies' capital will positively impact the market, head of the State Insurance Supervision Service of the Azerbaijani Finance Ministry, Namig Khalilov told journalists on Dec. 12.
He said the lack of profitability of some insurance companies in Azerbaijan has nothing to do with the raising of the minimum normative on the authorized capital of these companies.
"We are talking more about the financial possibilities of their shareholders. There are a number of companies with capital exceeding that level, which we might set as a new regulatory requirement. This issue is being discussed now. Moreover, we are waiting for the amendments to the law "On insurance activity" to come into force. In the future we will consider the possible increase in the minimum capital requirements for insurance companies," Khalilov said.
He said the need for changing the standard is for the market's protection.
"The insurance company will need sufficient capital, which will act as a buffer, in case, if the insurance company faces a lack of reserves, or it calculates the tariffs incorrectly, or for example, the reinsurance program has not been properly compiled. The higher the capital of the market participants, the more reliable and protected it is," Khalilov said.
The current capital requirement for insurance companies stands at five million manats ($6 million) and the same requirement for re-insurers amounts to ten million manats ($12 million).
Over ten years the insurance market capitalization increased by 16 times, while the incomes of insurance companies grew by 17.5 times. In 2002-2013 the minimum requirement for the insurers' capital increased from one to five million manats (approx. $1.2 million to $6.3 million).
Last year the aggregate capital of the insurance market was 343.44 million manats ($437.89 million), as well as the paid capital of the market stood at 294.06 million manats ($374.93 million), other capital reserves amounted to 49.39 million manats ($62.97 million).
There are 28 insurance companies and one reinsurance company in Azerbaijan.
The official exchange rate for December 11 is 0.7843 AZN/USD.
Translated by E.A.
Edited by C.N.