Baku, Azerbaijan, June 20
By Emin Aliyev - Trend:
The Azerbaijani Finance Ministry continues considering the consequences of tightening car loan issuance for local insurance companies, Azerbaijani Finance Minister Samir Sharifov told journalists on June 19.
"We continue assessing the impact of these decisions on the corresponding segment of the insurance market," he said. "Of course, a decrease in car sales negatively affects the profitability of insurers. This can be observed in the statistics. But it is too early to say whether this impact is serious or critical."
The central bank urged banks to tighten control over consumer loan issuance in late 2013.
The central bank sent a letter to the banks operating in the country with instructions to stop issuing loans without a borrower's certificate of employment. Moreover, lending conditions for car purchase were tightened. This is connected with the deterioration of the portfolio quality of the banking sector for this type of lending.
Along with the introduction of Euro 4 standard in the country, these decisions led to a sharp drop in car imports and sales on the domestic market and as a consequence, a drop in sales of the corresponding insurance policies.
Some 30,576 vehicles were imported to the country in January-May or 23 percent less than in the same period of 2013, according to the Azerbaijani State Customs Committee.
Some 27,444 units (89.8 percent) of the total volume of imported vehicles were cars and motor vehicles for the transportation of people. The figure was 35,816 units (a 23.4 percent decrease) in January-May 2013.
Some 2,765 trucks (9.04 percent of a total number of imported vehicles) were imported into the country during the reporting period, which is 8.9 percent less than in the same period of last year. The rest part of the cars imported in January-May fell to other vehicles.
Proceeding from these factors, the growth rates of the insurance market declined.
The total amount of the insurance companies' fees in the country amounted to 186.9 million manats in January-May 2014, which is 10.8 percent (18.2 million manats) more compared to the same period of last year. The volume of payments of insurance companies amounted to 55.2 million manats for the first five months of 2014, which is 13 percent (6.3 million manats) more than in January-May 2013.
The official exchange rate is 0.7843 AZN/USD on June 20.
edited by CN