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Dynamics of non-life insurance market development down in Azerbaijan

Business Materials 1 July 2020 16:10 (UTC +04:00)
Dynamics of non-life insurance market development down in Azerbaijan

BAKU, Azerbaijan, July 1

By Yusif Aghayev – Trend:

A decrease in the dynamics of development in the non-life insurance segment is observed in the Azerbaijani insurance market, Trend reports referring to a report published by the country's Central Bank.

In accordance with the report, the insurance companies operating in the non-life insurance segment collected the premiums worth 215.04 million manat ($126.5 million) from January through May 2020, which is by 12.02 million manat ($7.07 million) or 5.9 percent more than in the same period of 2019.

At the same time, the premiums in the field of voluntary medical insurance increased by 9.3 percent, reaching 69.7 million manat that’s $41 million (an increase of 5.9 million manat or $3.5 million).

The collection of premiums in the field of insurance of vehicles against damage or theft increased by 41 percent, exceeding 17.4 million manat ($10.2 million).

An increase in interest in this type of insurance has been stipulated by the fact that as a result of several waves of devaluation, spare parts and components for foreign-made cars sharply increased in price.

As a result, the maximum amount of the insured amount payable upon compulsory insurance of liability of motor vehicle owners is 5,000 manat ($2,941) in connection with property damage, often does not cover the amount of damage caused as a result of a car accident.

This has forced vehicle owners to often purchase voluntary car insurance products, which are offered in a wide range by domestic insurers.

The premiums on voluntary insurance of property against fire and other risks (a decrease of 2.6 million manat that’s $1.5 million) decreased by more than 14 percent, while the premiums on cargo insurance remained unchanged - a little more than 1.5 million manat ($882,352), as well as liability insurance - almost 12 million manat ($7.05 million).

The premiums also increased in the field of agricultural insurance. Thus, an increase in premiums by more than 2.3 times was observed in cattle insurance, exceeding one million manat ($588,235).

Crop insurance increased by more than seven times, due to creation of the Agricultural Insurance Fund in Azerbaijan at the beginning of this year and its active work on the implementation of the law on agricultural insurance and above all in the implementation of measures aimed at raising the awareness of farmers in this field of insurance.

The dynamics of the development of the collection of premiums in this insurance segment for the first quarter of 2020 amounted to 23 percent compared to the first quarter of 2019 while 12 percent from January through April 2020.

The slowdown in dynamics is associated with a decrease in economic activity due to the impact of the coronavirus pandemic (COVID-19) and the negative consequences it has caused for the financial sector of the country.

From January through May 2020, the insurance companies of Azerbaijan collected 355.9 million manat ($209.3 million) of insurance premiums, which is 36.6 million manat ($21.5 million) or approximately 11.5 percent more compared to the same period of the previous year.

Today, 21 insurance companies and one reinsurance company operate in Azerbaijan.

(1 USD = 1.7 AZN on July 1)

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