Azerbaijani insurance market avoided large-scale negative effects of COVID-19 - AIA

By Trend

A decline tendency was observed to a greater or lesser extent in various spheres and segments of the Azerbaijani economy, Executive Director of the Azerbaijan Insurers Association (AIA) Elmar Mirsalayev told Trend.

“Nevertheless, it can be said with confidence that the domestic insurance market coped to avoid the large-scale negative effects of the COVID-19 coronavirus pandemic,” Mirsalayev said.

According to him, the summary indicators of the local insurance market for January and February indicate a relatively negative impact, but at the same time, according to the results of the first quarter of 2021, there is a positive tendency.

"From January to March of this year, the insurance fees of Azerbaijani companies amounted to 248.9 million manat ($146.4 million), which is 8.2 million manat ($4.8 million) more than in the same period in 2020," the executive director said.

He noted that the upward tendency was recorded in insurance payments as well. So, in the first three months of this year, insurance payments amounted to 145.3 million manat ($85.4 million), which is 68.3 million manat ($40.18 million) more than a year earlier.

“In general, insurance fees exceeded the total payments by more than eight times, which is a positive fact. I believe that ensuring the dynamics of growth in insurance fees is clear evidence of the successful and persistent resistance of the local insurance market to the challenges of the pandemic, and the increase in insurance payments is an indicator of the high activity of insurance companies in the country,” Mirsalayev further said.

He added that dynamic growth will continue for the next medium and long term, as steps are constantly being taken to raise interest in insurance services from existing and potential policyholders, and in this direction, as can be seen from the growth of fees, real results are being achieved.

Along with the above, the executive director noted that the measures of the Central Bank of Azerbaijan (CBA), as a regulator of the local insurance market, to capitalize the insurance sector, strengthen its immunity to macroeconomic shocks and remove participants who have lost financial stability, are important from the point of view of reliable development of the insurance market.

“The revocation of the licenses of some insurance companies should be regarded as a remediation measure taken in the light of real market conditions. This is a very timely step, as the local insurance market is in a new phase of its development,” he said.

According to him, any market participant that has lost financial stability can have a negative impact on the dynamics of market activity and the overall market share, and in this regard, the relevant decisions to cancel licenses in the name of developing the local insurance market should be positively assessed.

Speaking about the three-year strategy for the development of the Azerbaijani insurance market, Mirsalayev said that in parallel with the rising insurance literacy and development of insurance services, the issue of stimulating the activities of insurance companies is also being considered.

“This roadmap was approved by the participants of the local insurance market and adopted by the sector's supervisory authority - the Central Bank of Azerbaijan. The Supervisory Board of AIA approved a three-year strategy for the development and stimulation of the local insurance market in April this year,” he also stated. “In particular, this strategy pays attention to the formation of relations with public and private organizations, the preparation of draft amendments to the legislation in accordance with modern market conditions and the implementation of the mutual exchange of personnel and experience with the subjects of the world insurance market.”

The executive director of AIA added that such directions in the three-year strategy are laid down precisely to support the activities of local insurance companies.

Summing up, he noted that in the insurance market of Azerbaijan in the short and medium-term, steps were outlined for intensive work in the direction of educating and informing citizens. For this, fundamental steps are being taken both in terms of establishing cooperation with structures closer to the use of insurance services and in the direction of informing and ensuring access of entrepreneurs and citizens to insurance services.

AIA currently has established cooperation with the Turkish Insurance Union, the Azerbaijan Entrepreneurs' Confederation, the Entrepreneurship Development Fund, the Center for Social Research and the Association of Accountants and Risk Specialists. As part of this cooperation, regular meetings are held on insurance awareness and fundamental propaganda work, and in the subsequent stages, another priority task for the organization will be to establish interaction with other public and private organizations.

“Citizens should not forget that insurance, as in all other countries, is one of the main locomotives of the economy, because by taking progressive steps in the insurance sector, we, to a certain extent, stimulate the development of the Azerbaijani economy. I hope and predict that all our activities will yield positive results in the medium and long term,” concluded Mirsalayev.