Azerbaijani insurers eye partial restriction of accumulative insurance (Exclusive)

Business Materials 15 May 2018 20:03 (UTC +04:00)

Baku, Azerbaijan, May 15

By Anvar Mammadov – Trend:

Azerbaijan Insurers Association (AIA) is in talks with the Ministry of Labor and Social Protection of the Population on changes to the Law on Social Insurance, AIA Chairman Mustafa Abbasbayli said in an interview with Trend.

He said a special package of proposals has been submitted to the ministry.

"Presently, we are in close contact with the labor ministry and sent a package of four-page proposals to the ministry, and a draft will be sent to the parliament soon," Abbasbayli said.

The State Social Protection Fund (SSPF) under the Ministry of Labor and Social Protection of the Population proposes to amend the legislation for restriction of preferences for persons who have endowment insurance (accumulative insurance). Under the current legislation, persons who have endowment insurance for a period of more than three years are exempt from compulsory social insurance fees. The SSPF proposes to limit the volume of funds that can be directed to compulsory social insurance, but insurance companies do not agree with this.

Abbasbayli noted that a complete cancellation of preferences would harm not only the insurance market.

"I think that if this type of insurance is completely restricted, this will damage the insurance market. Furthermore, the accumulative insurance is very important for the investment climate in the country. This type of insurance encourages official contracts and salaries," he said, stressing that it is very significant.

Abbasbayli stressed that the proposals submitted to the ministry will allow to find a compromise that does not damage the insurance companies or other structures.

"We proposed to limit the lending, which now amounts to 100 percent of the insurance premium. We suggested the lending amount at the level of a maximum of 50 percent. In addition, we also suggested limiting the amount of money annually directed to accumulative insurance, that is, if in the first year the customer directs 100,000 manats to accumulative insurance, then in the next year he/she will not be able to direct more than this amount. These restrictions will prevent possible abuses," he said.

According to Azerbaijan’s Financial Markets Supervisory Authority (FIMSA), in January-March 2018, the endowment insurance premiums totaled 50.01 million manats, which makes up 25.9 percent of total insurance fees. Payments for this type of insurance amounted to 26.43 million manats (43.8 percent of total payments).

($1 = 1.7 AZN on May 15).


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