Baku, Azerbaijan, May 15
By Anvar Mammadov - Trend:
Azerbaijan’s Financial Market Supervisory Authority (FIMSA) plans to introduce temporary administration mechanism in insurance companies in the country, Chairman of the Azerbaijan Insurers Association (AIA) Mustafa Abbasbayli said in an interview with Trend.
He said that in connection with this step, the regulator is preparing proposals for amendments to the “Law on Insurance Activity.”
Abbasbayli noted that this would allow the regulator to achieve consolidation of small insurance companies in the market.
“Unfortunately, we cannot unite insurance companies on a mandatory basis,” he said. “We always tell small companies that it is necessary to unite, but I don’t know how ready they are for this. Therefore, discussions are underway regarding amendments changes to the “Law on Insurance Activity”, which envisages for introduction of temporary administration mechanism. If the amendments are adopted, the regulator will have an additional instrument of influence on insurance companies.”
Speaking about the changes, he noted that the process of temporary administration can be divided into three stages.
“At the first stage, the regulator will demand from an insurance company its strategic development plan,” he said. “If this doesn’t help, the regulator at the next stage will demand a change in the management of the company, and if this step doesn’t yield results, either, the regulator itself will change the company’s management on a compulsory basis. Such a step will make it possible for the regulator to increase its influence on unprofitable insurance companies.”
Presently, FIMSA applies such a mechanism in the banking regulation.
Twenty-one insurance companies operate in Azerbaijan. At the end of the first quarter of this year, insurance premiums of two of them (Amrah Insurance and Nakhchivan Insurance) don’t exceed 100,000 manats, while insurance premiums of other two companies (Revan Insurance and Baku Insurance) - range within 100,000 manats to 500,000 manats, according to the FIMSA.
The insurance premiums of the remaining companies exceed 1 million manats, insurance premiums of only seven companies of them exceeded 5 million manats. These seven companies account for 85 percent of all premiums in Azerbaijan’s insurance market, that is, 164.72 million manats out of 193.12 million manats.
(1.7 manats = 1 USD on May 15)
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