Volume of insurance payments increases in Azerbaijan

In January-July 2024, the insurance sector in Azerbaijan saw significant growth, with a total of 833 million 581 thousand manats collected in premiums through 17 insurance companies operating in the country, Azernews reports.

This figure represents a notable increase of 71 million 780 thousand manats, or 9.4%, compared to the same period in 2023, according to reports from Azernews and data provided by the Central Bank of Azerbaijan.

The increase in premiums collected indicates a robust performance by the insurance sector, reflecting a higher level of confidence among policyholders and possibly a broader uptake of insurance products. This growth could be attributed to various factors, including expanded insurance coverage options, enhanced marketing efforts by insurance companies, or increased economic activity leading to higher insurance needs.

Simultaneously, the amount of payments made by insurance companies during the first seven months of 2024 was 440 million 192 thousand manats. This represents a significant increase of 157 million 215 thousand manats, or 55.5%, compared to the previous year. The substantial rise in payments suggests that insurance companies are fulfilling more claims or higher-value claims than in the past, which could indicate an uptick in incidents or a broader scope of coverage being utilized.

The contrast between the increase in collected premiums and the substantial rise in payments made by insurance companies points to a dynamic and evolving insurance market. On one hand, the higher premiums collected reflect growing revenue and market expansion. On the other hand, the increase in payments highlights a higher outflow of funds, which could be due to a variety of factors such as increased claims, higher claim amounts, or an expansion in the types of coverage offered.

This dual trend of increasing premiums and payments suggests that while the insurance industry in Azerbaijan is experiencing growth and increased market penetration, it is also facing higher liabilities and potentially more significant claims. For insurance companies, balancing these dynamics will be crucial for maintaining financial stability and profitability.

The overall health of the insurance sector will depend on how well these companies manage their risk portfolios and how effectively they can sustain premium growth while managing claims expenses. Regulatory oversight and strategic adjustments will play key roles in ensuring that the sector continues to thrive in a competitive and potentially challenging environment.