TODAY.AZ / Business

AIA, IFC to ink agreement on agricultural insurance

18 May 2015 [18:08] - TODAY.AZ

/By AzerNews/

By Aynur Karimova

The Association of Insurers of Azerbaijan and the International Finance Corporation are expected to sign an agreement this summer as part of the implementation of the project of agricultural insurance in Azerbaijan.

The signing of the relevant agreement will take place following the 6th International Insurance Forum, to be held in Baku on July 2-3, 2015, Orkhan Bayramov, head of AIA told journalists on May 18.

"We are not talking about creating legislation in the field of agricultural insurance because, first of all, it is necessary to train specialists in this field," he said, adding that the training of specialists would start in September.

Training will be conducted by international experts. The country they will come from depends on the insurance model, which will be preferred.

"This can be both specialists from Turkey, and other countries of the region," Bayramov added.

He also stressed on the necessity to involve actuaries to this field.

Agricultural insurance is usually classified based on the risks of insurance of animals, plants and machinery and equipment, assets of farmers, and investment risks.

Today Azerbaijan develops the relevant legislation for the mass use of agricultural insurance in the country. Currently, the government provides subsidies for agricultural insurance, but their coverage is very small.

According to the amendments to the law on the assistance and development of agriculture in Azerbaijan as approved in summer 2007, the share of public financing in the agricultural insurance premium was increased from 25 to 50 percent.

Besides wheat, barley, maize, sunflower, potato, sugar beet and vegetables were included to the list of agricultural crops, insured by the funds of the state budget.

The average tariff on agricultural insurance in Azerbaijan amounts to around 1,500 manats per year (five percent per hectare), while the average profit per hectare is about 25,000 manats per year.

Each year Azerbaijan's officials in charge of the state budget determine the funds in view of covering 50-percent of the cost of all insurance contracts with farmers. Unfortunately, it is almost never used to its full capacity.

Some 28 insurance companies are working in Azerbaijan. AIG Insurance (now Chartis), AXA, Miracle Insurance and Financial Group, Basak and Glencarron Group Limited are the largest international players in Azerbaijan's insurance market.

Also, Slovenian Sava Re reinsurance company, German Munich Re insurance company, Russian ROSGOSTRAKH, and ROSNO companies have shown great interest in Azerbaijan's insurance market.

The official exchange rate on May 18 was 1.0471 AZN/USD.

URL: http://www.today.az/news/business/140827.html

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