During the Forum, there have been debated the most relevant topics of the insurance market of Azerbaijan, such as catastrophic risks, reinsurance and health insurance. Also, during the second day of the event, there were organized workshops focusing on Motor Insurance & Claims Handling, Risk Management and Life Insurance.
Positive aspects of the crisis
Despite the economic crisis, which over the last five years has obtained an "international character" and influenced the economic, political and social segments in many countries, the insurance market of Azerbaijan, as well as the whole economy, recorded an annual steady growth. Economic indicators of Azerbaijan tripled over the past 10 years.
Samir SHARIFOV, the Minister of Finance of Azerbaijan, emphasized in the opening of forum that the Azerbaijani insurance market increased by 6 times over the past 8 years and, over the last 2 years, doubled to USD 543 million. "In the period of 2004-2013 the share of insurance premiums to GDP increased from 0.41%, to 0.71%. Net profit of insurers increased by more than 9 times - to USD 84 million and the total capital - by 8.9 times, from USD 52 million to USD 463 million", added Samir SHARIFOV.
The Chairman of the Committee of Economic Policy, Parliament of Azerbaijan, Ziyad SEMEDZADE, noted that such advances were made possible by the fact that the insurance legislation of Azerbaijan corresponds to international standards.
Also, Fuad KULIYEV, Chairman of the Management Board of the reinsurance company AZ Re, in his presentation, "Post-Soviet insurance market - the main trends" drew a parallel of development of the insurance market of Azerbaijan and other CIS markets. Azerbaijan ranks 6th after Russia, Ukraine, Kazakhstan, Belarus, etc., in terms of surface and population, but considering the most important macroeconomic indicators as GDP (EUR 53.53 billion) Azerbaijan ranks fourth after Russia, Ukraine and Kazakhstan. In terms of GDP per capita (5751 Euro) - third place, after Russia and Kazakhstan. These figures indicate a high potential for further development of the insurance market of Azerbaijan.
Catastrophic Insurance Pool - a public-private partnership
Azerbaijan Insurers Association and the Ministry of Finance are currently working in partnership with leading international reinsurance companies on creating the country's catastrophic insurance pool.
In the presentation of Jurgen BRUCKER, Client Manager, MUNICH Re, Germany, it was noted that in Azerbaijan most of the population lives on the Absheron peninsula, partly along the river Kura and territories bordering the Caspian Sea. From this point of view there is a high probability of catastrophic events as a result of extra tropical storms and hail. An effective step for the better organization of insurance may be the creation of an "insurance pool". This view is substantiated by positive examples of countries such as Germany, Turkey, Mexico and Chile.
To increase insurance penetration among the population in the long term, it is needed to analyse a possibility to create an insurance pool against the risks of natural disasters with the parallel system of compulsory real property insurance.
Such a mechanism works as follows: the population purchases the policies of compulsory property insurance, insurance companies cover the risks of the owners' against natural disasters and the companies will transfer their risks to the pool.
Compulsory health insurance - a guarantee of health protection
"Azerbaijani insurers are ready to introduce the compulsory health insurance, even if there are obvious difficulties. At the same time we know what problems have to face that the difficulties associated with the financing of the medical sector, problems with accreditation, development of medical protocols and other aspects", said at the event Rena MAMMADOVA, Medical Insurance Director, PASHA Sigorta.
About experience of implementation and operation of health insurance in Germany told Dr. Marc-Pierre MOLL, Head of Unit "Government and Parliament", Association of Private Health Insurance, Germany. In the presentation shows the main advantage of the dual system, which issued in Germany: Germany combines the strengths of the public and the private system, two insurance systems within one health care system and there is not a two-class-system of medicine: the insured go to the same doctors into the same hospitals and enjoy basically the same standard of medical care. So, in 2014, those who earned more than 53,550 Euro/war can decide independently if they need health insurance, and if needed, what follows - private or public.
About the Georgian experience of implementing health insurance spoke Shota SVANADZE, Head of Facultative Risks Department, ALDAGI.
On February 28th, 2013 the universal healthcare program was launched in Georgia. This concerns the interests of citizens who do not have adequate health insurance.
The share of the health business in the consolidated insurance market increased from 62% (in 2011) to 74% (in 2012). But, in 2013 GWP in the health segment went down by 18%, to GEL 341.3 million, with a 72.46% market share. The main reason for the decline of the health insurance business is the complete removal of private insurance companies from all government projects.
In Azerbaijan about 99% of the voluntary health insurance market is taken by corporate clients. In 2013 the market share of voluntary medical insurance was 16.13% in all GWP.
Today Azerbaijan's population is approximately 9.5 million people and the compulsory health insurance system is aimed at ensuring that every citizen has the possibilities of using the minimal medical services.
Azerbaijani reinsurance market in one year rose by more than a quarter
"Azerbaijan Insurance Market is the biggest insurance market in the South Caucasus, with a share of 59%. Moreover, the local market is the leader in terms of capitalization and is the biggest consumer of reinsurance services. With regard to reinsurance, the Azerbaijani market houses one one reinsurance company AZ Re and 10 local insurers with effective license for reinsurance coverage. In addition, in the country there are more than 100 foreign insurance and reinsurance companies with approximately 150 branches, as well as 60 foreign reinsurance brokers", said Tural ALIYEV, Member of the Board, PASHA Sigorta, Azerbaijan.
According to Tural ALIYEV the volume of reinsurance premiums for 2013 rose by more than 26 percent. On the same subject spoke the representatives of leading international reinsurance companies: HANNOVER Re, EVEREST Re, MILLIE Re, TRUST Re etc.
In the second day of AIIF2014 there were organized three workshops: Motor Insurance & Claims Handling Workshop, Risk Management and Life Insurance Master Class.
The first workshop reviewed the motor insurance market in the Caucasus region. Moreover, participants discussed the possibility of using technology and intelligence for claims cost optimization, cross-border cooperation in motor insurance claims and Green Card system: is this a necessity for the Caucasus region?
According to Elkhan GULIYEV, Executive Director, Compulsory Insurance Bureau in Azerbaijan, the lack of insurers' profitability on MTPL may be reduced, one of the necessary measures being the decrease of the administrative costs, including the acquisition expenses with insurance agents.
The second workshop's agenda included topics such as: "Risk management in a period of financial instability & geopolitical pressure", "Risk management techniques for energy, gas & oil fields, constructions" and "Emerging risks and data management".
In the framework of the Life Insurance Master Class was analyzed the life insurance market in Azerbaijan, the main issues and trends, as well as the experience of other countries to do business on this segment and there was given a forecast about the life insurance market of Azerbaijan in 2014. Currently, there are three life insurers active on the Azeri market: PASHA Hayat, ATESGAH Hayat and QALA Hayat and according to the Deputy Chairman of the Board of PASHA Hayat, Niyaz ISMAYILOV, now in Azerbaijan there is no need to attract new players in the life insurance market.
"Companies make a competition in the market and now they are fully satisfying needs of the population in insurance products. The growth rate of the life insurance market in 2014 will exceed the growth of the insurance market in general. Growth of the life insurance market of Azerbaijan in 2014will amount to30-40%", said Niyaz ISMAYILOV.
During AIIF 2014, a new edition of XPRIMM Insurance Profile Azerbaijan was launched. The magazine analyses the market results for 2013, as well as those for January - March 2014. Moreover, the magazine presents macroeconomic financial data and underlines, at the same time, the potential of the local profile market. The latest edition of XPRIMM Insurance Profile Azerbaijan also includes reinsurance articles, interviews with well-known professionals on the local market, as well as the company profiles of the most important players on the Azerbaijani insurance market.
All AIIF 2014 Presentations and Photo Gallery are available on:
Media XPRIMM is a media group and a public relations organization specialized in the re/insurance and private pensions' markets. Focused on the CEE, SEE and CIS insurance markets, the Group produces a number of well known international events as FIAR - The International Insurance-Reinsurance Forum, ICAR - The International CAtastrophic Risks Forum, IIF - The International Insurance Forum and many other. Media XPRIMM is the owner and the editor of www.xprimm.com and XPRIMM Insurance Report, the main sources of insurance news and statistical data for the 32 countries from the CEE, SEE and CIS regions.
"Azerbaijan Insurers Association" Social Union is non-governmental organization which was established on a voluntary basis and legal equality of members that stand united for the common interests of the market. The main purpose of the Union: assist insurance and reinsurance companies that function in the Republic of Azerbaijan and are members of AIA in their development, to support their social-economic, information and other development programs and increase scientific knowledge in this field. One reinsurance company and 27 insurance companies out of 28 that function at the insurance market of Azerbaijan are members of Azerbaijan Insurers Association.