What expects Azerbaijan's insurance market?

The demand on the Azerbaijani insurance market has increased after using compulsory kinds of insurance. Compulsory kinds of insurance had a stimulating effect on voluntary kinds of insurance.

According to the State Insurance Supervision Service under the Azerbaijani Finance Ministry, the fees for compulsory kinds of insurance in January amounted to 3.421 million manat, by increasing more than twice during the year. Their share in the total volume of fees increased from 9.09 to 9.25 percent. The total volume of premiums on voluntary insurance other than life in this period amounted to 30.8 million manat (83.28 pe cent of total volume of premiums), increasing by twice.

The law on "Mandatory types of insurance" regulates four types of compulsory insurance -- real estate, liability of owners of vehicles, passenger insurance and liability insurance while touching on real estate. Insurance companies started using the law since December 16, 2011.

The compulsory insurance of vehicle owners' liability is in the lead among compulsory kinds of insurance. The fees on compulsory insurance of vehicle owners' liability increased by 6.5 times in January 2012 amounted to 2.03 million manat compared to January last year. In general, about 59.33 percent of fees for compulsory insurance fell to compulsory insurance of vehicle owners' liability in the first month of this year and 5.5 percent of total premiums collected in the market during this period.

The European countries historically supported their population and insurers in the period of the insurance culture in their countries through these mandatory kinds insurance. A wide range of different areas of insurance increased from the original compulsory kinds of insurance. Thus, there are about 500 kinds in modern Europe and up to 3,000 types of voluntary insurance services in the U.S. At present, there are about 30 in Azerbaijan.
The introduction of compulsory insurance has a positive effect on the development of insurance culture of the population and business circles. Today, the majority of the Azerbaijani population does not have enough confidence in insurance companies. The reason is the population's poor awareness of the insurance companies. However, all real estate has been insured virtually by 100 percent in the developed countries, although it is only necessary when buying a home through a mortgage.

The compulsory insurance bureau was established in Azerbaijan in December last year in accordance with the requirements of the new law on "Mandatory types of insurance". It consists of nine companies. The Azerbaijani State Insurance Commercial Company was the latest one which entered in the registry of the bureau on January 25. The company will work on the compulsory real estate insurance and civil liability during its use. All other members of the Bureau render services for three types of compulsory insurance, except for compulsory insurance of passengers. The only company which applied for the Azerbaijani Finance Ministry's permission to deal with insurance of passengers, is ?pek Yolu S?gorta company(former Azal S?gorta).

The growth of the Azerbaijani insurance market is also possible through the introduction of new types of compulsory insurance in the fields of national economy, such as electricity, tourism, agricultural, etc. For example, losses from the damage made as a result of flood in Kur and Araz rivers in Azerbaijan in April and May 2010, which are a heavy burden for the state, testify to the need to introduce a mandatory type of insurance in the agricultural sector.

The successfully developing tourism sector envisages the affection for insurance.

The world practice shows that the more the insurance of real estate facilities, transactions, life is developed, the more stable and progressive is the development of the economy.


Leyla Abdullayeva /Trend/