The World Bank has granted Azerbaijan with $323,000 for the improvement of the legislation in the sphere of insurance. Beybala Khankishiyev, the head of the Central Insurance Control Department of the Ministry of Finances, said that a grant agreement will be signed shortly after the accession of authorities, Trend reports.
The Ministry of Finances plans to adopt in new edition draft laws on Obligatory Insurance and on Obligatory Types of Insurance. Upon coordination with the WB experts the first bill was passed to the government to ensure its approval at the parliament t by the end of 2006.
Due to insufficient development of insurance market the law does not envisage distribution of companies which are specialized in life insurance, though it was planned earlier. However, Azer Bayramov, the Azerbaijani Minister of Finances, told Trend that finally we will try to go to such distribution. The Ministry of Finances plans to determine a business schedule for the nearest 2-3 years in the near future.
According to Bayramov, the Ministry of Finances plans to design special state program on development of insurance in Azerbaijan. Relevant work has been implemented with the international financial institutes to the legislative acts. Within framework of improvement of mechanisms on 9 types of obligatory insurance in 2007 it is planned to adopt a anew draft law on obligatory types of insurance.
Insurance is in its earlier stage of development in Azerbaijan and in CIS. Special weight of the insurance market in the Gross Domestic Product (GDP) is around 1%, while in the developed countries it reaches 8%. Last year the figure was 0.8% in Azerbaijan, which is 0.6% more than 2001.
Bayramov said that over the past 5 years there had been a progress in the insurance market. Insurance remittances grew 5.3 times in 2005 as compared to 2001. Despite cut in the number of insurance companies from 45 in 2001 to 28 in 2005, the aggregate amount of the statutory capital of all companies rose 5.4 times. However, the Ministry of Finances intends to increase the requirements laid on capitalization to ensure competition capability, as well as of their capacities.