Azerbaijani insurers to be able to adapt to changes of manat rate – expert

Business Materials 2 March 2015 16:53 (UTC +04:00)

Baku, Azerbaijan, Mar. 2

By Azad Hasanli - Trend:

Insurance companies of Azerbaijan will be able to compensate for the increased costs caused by the change in exchange rate of manat [starting from February 16] at the expense of new products, the chairman of the Board of Bashak-Inam JSC Orhan Hasanov said.

He said that the insurance companies must take certain steps in order to adapt to the current situation in the country's economy.

Starting from February 16, 2015, the Central Bank of Azerbaijan freed the rate of manat, which remained at a stable level for a long time. Starting from February 21, the Central Bank has established rate of the manat to the US dollar at 1.05 manat per dollar, which corresponds to the cheapening of rate by 33.9 percent.

The official exchange rate of the US dollar to the Azerbaijani manat on March 2 is set at 1.0496 manat.

"Of course, it [the weakening of the national currency] will have its impact on the market," he said. "For example, if the prices for spare parts for cars rise, then the cost for repairs will respectively increase, which in turn will force the companies to increase the amount of insurance fees. However, if the prices do not increase, then the fees will remain the same."

The CEO said that even if the amount of insurance premiums increases, it will only be applied to new contracts and will not affect the old ones.

At the same time Hasanov said that the size of the tariff applicable in motor insurance can be reduced. "If the repair of cars is carried out in informal service centers, insurance rates will be lower due to the fact that repair in such centers is cheaper than in the official service centers," he said.

Previously, insurance companies have offered to repair cars in the conventional car repair services in order to reduce the costs of insurers. That's because certain problems associated with cars can be solved in the usual car service centers.

In connection with the adjustment of the manat exchange rate, certain changes will affect all insurance companies in the country, according to Hasanov.

Bashak-Inam OJSC operates on the insurance market of the country since 1996 and renders 31 kind of insurance services. By the end of February 2015, the company's insurance fees accounted for nearly 100,000 manats, and payments - about 50,000 manats.

Some 19.95 percent of its shares are owned by Zamin Bank, 48 percent account for individuals, 17 percent are owned by Groupama Sigorta A.S. (a Turkish subsidiary of one of the largest insurance companies in Europe Groupama), 8.5 percent by Turanbank, 6 percent - AzerTurkBank and less than 1 percent accounts for the non-bank credit organization Aqrarkredit.

There are 27 insurance companies in Azerbaijan.

Edited by CN

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