...

Azerbaijan needs to enhance real estate insurance penetration

Business Materials 19 September 2018 09:18 (UTC +04:00)

Baku, Azerbaijan, Sept. 19

By Anvar Mammadov - Trend:

It is necessary to increase the penetration of real estate insurance in Azerbaijan, Orhan Mammadov, first deputy chairman of the board of AtaInsurance company believes.

The first deputy chairman of the board noted that this step will allow to achieve the development of both compulsory and voluntary insurance.

"The increase in the penetration of real estate insurance can serve as a catalyst for the development of the entire voluntary insurance sector. At the moment, this is one of the main challenges facing the market today. Unfortunately, currently this type of insurance is not very popular, but this situation can change," Mammadov told Trend.

The first deputy chairman of the board noted that in order to increase the penetration of real estate insurance in the country it is necessary to improve the financial literacy of the population.

"Here, a great responsibility lies with insurance companies and the media. It is necessary for the population to be aware of the existence of the product, its necessity and cost. Many people think that the insurance premium for compulsory insurance of real estate is a certain proportion of the cost of the apartment. Therefore, it is necessary to take literacy seriously," Mammadov said.

In the case of compulsory insurance of real estate, where the percentage of market penetration is also low, it is also necessary to strengthen control over the conclusion of contracts.

"Currently, the control over the acquisition of compulsory real estate insurance policies is carried out only with the notarization of the transaction for the sale or transfer of property. There are proposals to use the experience of some countries and check for the availability of insurance policy when paying for utilities. This issue is already under discussion. In addition, these types of insurance should be offered online so that the population could purchase policies without leaving home," Mammadov said.

According to the data of the Financial Markets Supervision Chamber of Azerbaijan, in January-July 2018 the fees for compulsory real estate insurance have amounted to 17.24 million manats, with insurance payments amounting to 1.95 million manats.

Currently, 13 insurance companies being members of the Compulsory Insurance Bureau (Ateshgah Insurance OJSC, Standard Insurance OJSC, AtaInsurance OJSC, Xalq Insurance OJSC, PASHA Insurance OJSC, AXA MBASK OJSC, AzInsurance OJSC, State commercial insurance company AzerInsurance, Meqa Insurance OJSC, Silkway Insurance OJSC, Azerbaijan Senaye Insurance OJSC, Qala Insurance OJSC, Gunay Insurance OJSC) are functioning in Azerbaijan in the sphere of compulsory insurance of immovable property.

The compulsory insurance of real estate covers all types of buildings, houses, apartments owned by individuals and legal entities, as well as the state property. In this case, the facts related to the damage to this property as a result of fire, explosion, short circuit in the power supply network, accident in the sewer or water system, natural disasters, etc. are considered to be the insured event.

The tariff for this type of insurance is 0.2 percent of the sum insured.

The maximum amount of insurance payment for real estate is 25,000 manats in Baku, 20,000 manats in Ganja, Sumgayit and Nakhchivan, 15,000 manats in other towns. The cost of insurance is 50, 40 and 30 manats respectively.

Some 13 out of 16 insurance companies being members of the Compulsory Insurance Bureau have licenses for the provision of compulsory real estate insurance services.

Tags:
Latest

Latest