Insurance companies seek to cut costs of health insurance

/By AzerNews/

By Amina Nazarli

Insurance companies seek to get concessions from private clinics to provide services for health insurance, said Orkhan Bayramov, Chairman of the Azerbaijani Insurers Association on January 25.

He said the issue was discussed at a meeting with leaders of insurance companies, held with the participation of Namig Khalilov, the head of the State Insurance Supervision Service.

“We discussed how insurance companies can reduce the cost of health insurance, as well as the possibility of changing the service provision format under this type of insurance,” the chairman said.

Bayramov considers wrong to increase the prices for medical services because of rising drug prices.

“Not all health services are related to medications, therefore it’s not right that private clinics raise prices for their services, because all other costs, such as electricity or taxes remained the same for them,” he noted.

Bayramov added that insurers will discuss these issues with their partners, and partner clinics refuse talks, then insurance companies can cease cooperation and redirect their customers to other clinics.

A total of 27 insurance companies are operating in Azerbaijan. In 2015, fees for medical insurance amounted to 72.9 million manats and payments made up 51.3 million manats.

Bayramov further emphasized that insurance companies are not interested in increasing the insurance fees, adding that although many insurers enjoy the right to provide services for health insurance, in practice only seven or eight companies are engaged in it.

The chairman also touched upon the compulsory insurance of liability of owners of vehicles (OSAGO), noting that Azerbaijan does not plan to raise tariffs on this field.

He said the tariffs will not rise even if unprofitability of this kind of insurance will grow, as today the main issue is to reduce the costs of insurance companies. “We are talking about administrative costs, commission paid by insurance agents, etc.,” he noted.

Payments worth of 22.7 million manats were made through OSAGO in 2015. Compared to the 2014, the volume of payments decreased by 15 percent, while the number of requests reduced by 10 percent.

The average amount of insurance payments in connection with damage to vehicles was 1,155 manat last year.

Bayramov went on saying that the State Insurance Supervision Service under the Azerbaijani Finance Ministry will direct new guidelines on the calculation of the rates for voluntary car insurance to insurance companies.

“Fees for voluntary motor insurance CASCO have been reduced since 2014, namely after the decision of the Central Bank of Azerbaijan to tighten lending conditions. CASCO is mainly sold through banks. At the same time, now the car market is experiencing a period of stagnation, and import of cars in the country reduced. All this affects the insurance market and, in particular, CASCO,” he said.

Bayramov noted that last year the association together with the State Insurance Supervision Service and insurers developed a mechanism for the calculation of CASCO tariffs.

“Each insurance company has its own portfolio and we recommend to determine the tariff in accordance with this portfolio,” he emphasized.

The State Insurance Supervision Service under the Azerbaijani Finance Ministry sees no need to increase the minimum requirements for the total capital of insurance and reinsurance companies, Head of the State Service Namig Khalilov told Trend.

”Our requirements to the total capital are not so small, especially this is a minimum requirement. At a certain volume of business, these requirements are automatically increase,” he noted.

He further added that insurance companies have no problem with the fulfillment of requirements for total capital. “Following the first devaluation of the manat in early February 2015, the insurance companies have transferred their funds into the foreign currency, and after the second devaluation in December, this led to increase of the cash resources in the manat terms,” the head of the State Service said.

In this connection, problems with capitalization of insurance and reinsurance are not expected in the near future.

The requirement for the minimum total capital of insurance companies is 5 million manats.

For the newly established insurance companies the minimum capital requirement is defined at 10 million manats, while the requirement for the minimum amount of aggregate capital of reinsurance companies is 20 million manats.