TODAY.AZ / Business

Insurance market under pressure

22 August 2014 [12:30] - TODAY.AZ
By AzerNews

Changing in Azerbaijan's car market is affecting the insurance market of the country.

The growth rate of the Azerbaijani insurance market has declined in comparison with previous years after reducing of imports, tightening of car loans and the changes in terms of inspection, the statistics of the State Insurance Supervision Service under the Ministry of Finance says.

"All these factors have undermined the insurance market. First, restrictions in bank lending served to reduce by half charges from voluntary motor insurance CASCO. Second, the elimination of maintenance for new cars has led to a sharp decline in fees for compulsory car insurance OSAGO", expert in the field of insurance Khayal Mammadkhanly believes.

It is unlikely that the cars owners who received an insurance policy a year ago to update it until the next technical inspection. So, significant growth in the market before the end of 2014 can hardly be expected.

Although with the rise of the administrative penalty for the lack of a new insurance policy [50 AZN] this summer an increase is expected in the fees for this type of insurance, Mammadkhanly said.

According to the rules approved by CBA at the end of March 2014 on regulating of credit risks of one or a group of borrowers related with each other, the initial payment on car loans cannot be less than 40, 50 and 80 percent of the value of the purchased car, depending on its price and age at the time of sale.

The decision was made due to increased volumes of overdue loans most of which are car loans. Following this decision, the issuance of the loans, provided mostly from the car insurance policy sales, was actually stopped.

In January-July 2014, fees for compulsory insurance of vehicles totaled 37.8 million (20.1 percent of the fees for non-life insurance) with payments of 16.3 million (22.3 percent of the payments of non-life insurance), and voluntary motor insurance premiums reached 21.2 million (11.3 percent) with payments of 15.8 million (21.6 percent).

Fees for insurance declined by 0.4 percent with an increase in payments by 16 percent. CASCO premiums saw a 34.6 percent decrease compared to January-July 2013, and payments increased by 4.96 percent compared to the same period of last year.

During the first seven months of 2014, the insurance market grew as a whole by 9.9 percent compared to the same period of last year. In 2012, the market grew by 60 percent and last year its growth reached 18.44 percent.

In 2012, the main driver of market growth was compulsory insurance, while last year the market growth was mainly made by voluntary insurance.

In the past year, the volume of voluntary insurance market grew by 26 percent, while the growth for compulsory insurance totaled 5.64 percent. It has become one of the main differences of 2013 from the previous one.
URL: http://www.today.az/news/business/136423.html

Print version

Views: 2160

Connect with us. Get latest news and updates.

Recommend news to friend

  • Your name:
  • Your e-mail:
  • Friend's name:
  • Friend's e-mail: