Turkish model suitable for pooling insurance resources in Azerbaijan
Baku, Azerbaijan, March 3
By Abbas Akhundov - Trend:
Turkey's model of a catastrophic pool is most suitable for Azerbaijan, Chairman of the Azerbaijan Insurers Association (ASA), Orhan Bayramov said.
Representatives of the association held a meeting with the employees of DASK (Turkish catastrophic pool) in Turkey in December, Bayramov told Trend on March 3. Furthermore, DASK representatives will attend the Azerbaijani Insurance Forum, traditionally held in Baku in the summer. Pooling resources will be one of the topics under discussion at the forum
"The Turkish system envisages payment being made to the general fund in lump sum payments to the amount of $50 to $300. The insurance amount will vary depending on the region and for each region, it is fixed. Insurance companies act as agents attracting new insurers and being paid commission," Bayramov said.
The insurance community stands in favour of the establishment of such a pool. However it is necessary to change the whole insurance system for it to work in the country, including the need to create an appropriate legislative framework, according to the chairman.
The initial portfolio of the pool as previously reported is assumed at the amount of 600,000-650,000 manats.
AzRe, the only reinsurance company in the country will redirect funds collected in the pool for reinsurance abroad and monitor technical issues. In accordance with world practice, the income of reinsures is made up from 10 to 20 percent of the risk transferred to them.
Companies participating in the Compulsory Insurance Bureau scheme will be involved at the pool at the initial stage.
Compulsory insurance of real estate in the country was introduced after the adoption of the new law 'On mandatory types of insurance' which started from December 16, 2011. Some 14 companies are the participants of the scheme established under the law.
At present, in accordance with the legislation, five percent of each fee for compulsory property insurance is intended to cover the risk of unforeseen events. Natural disasters covered by the compulsory insurance of real estate in Azerbaijan include earthquakes, volcanic eruptions, storms, hurricanes, hail, flood, torrents and landslides.
Some 28 insurance companies and one reinsurance company function in Azerbaijan. All are members of ASA.
The official exchange rate on March 3 is 0, 7844 AZN / USD.
Translated by S.I.
Edited by S.M.