Azerbaijan's state bodies, insurance companies should reach compromise on benefits in life-insurance - expert
Baku, Azerbaijan, March 19
By Anvar Mammadov - Trend:
Complete elimination of preferences applied in life insurance can have a negative impact on this market, insurance expert Khayal Mammadkhanli told Trend on March 19.
The expert said that these preferences significantly stimulated the life insurance sector, as many private companies concluded life insurance contracts and their employees have life insurance.
"Changes to the Law on Social Insurance proposed by the State Social Protection Fund (SSPF) under the Azerbaijani Ministry of Labor and Social Protection of the Population were expected. Various benefits are being applied in most countries on collections and payments for life insurance . The same was in Azerbaijan, that is, payments under life insurance contracts concluded for a period of more than three years were exempted from tax payments and payments to the SSPF. Unfortunately, some abused this point of the law and used life insurance to avoid tax and social payments. This was partly shown by statistics - many companies concluded contracts, and suspended them after three years, " said Mammadkhanli.
The expert noted that, state bodies and insurance companies need to find a "golden mean" in this issue.
"One of the compromise steps can be application of a certain limit when joining the life insurance program. That is, only part of it will be directed for life insurance - from 20 percent to 40 percent of the wages of citizens. Or a part of the salary that exceeds a certain amount can be directed for life insurance. At the same time, of course, it will be necessary to take into account the average statistical indicators of the wages of the country's citizens. Another possible compromise may be an increase in term of the insurance contract, after which preferences will be applied or certain changes will be introduced in compensation mechanism. In any case, all these changes should be taken in consideration of insurance companies' views," he said.
The Azerbaijani Insurers' Association (AIA) submitted proposals to Azerbaijan’s Financial Market Supervisory Authority (FIMSA) and the SSPF in connection with discussion of amendments to the law on social insurance.
AIA head Mustafa Abbasbeyli previosuly told Trend that the SSPF proposes to amend the legislation in connection with restriction of preferences for persons, who have life insurance.
Presently, three insurance companies - Ateshgah Life, Qala Life and PASHA Life - render compulsory insurance services against accidents at work in Azerbaijan.
According to the data of Azerbaijan’s Financial Market Supervisory Authority (FIMSA), in January 2018 the life insurance premiums totaled 12.62 million manats, which makes up 15.3 percent of total insurance fees. Payments for this type of insurance amounted to 11 million manats (47.6 percent of total payments).
(1.7 manats = $1 on March 19)