According to Farkhad Amirbekov, BBVB Manager, the insurance companies that concluded an agreement with BBVB on participation in MONEY-Market have not started active operations in the market as yet.
"They say that in new conditions they have to reconsider their participation and role in MONEY-Market. It's explained by the fact that the expectations associated with the changes in conditions for insurance of motor vehicles owners' civil liability have been deceived. Insurers don't conceal that this kind of business proved to be not only unprofitable but even loss-making. Probably, the insurance companies will have to reconsider their business models with regard to compulsory motor vehicle insurance and take new approaches to insurance risk management. Meanwhile, MONEY-Market platform should be considered as one of the best tools for insurance risks management", - Amirbekov said.
To enter the market the insurers which have already prepared traders will also have to create their own risk management system including internal standards and rules.
Another reason why the MONEY-Market has failed so far to be incorporated into the risk management system and practice of the insurance companies is that it's necessary to make short-term transactions in MONEY-Market that is to specially select short-term operations in the system of the insurance companies. This requires additional time and the companies just don't have it.
Meanwhile, the traders have passed training courses and the insurance companies have connected to the trade system of BBVB. At the first stage the insurance companies will act as creditors in money market though they are interested in other operations as well.
Currently four insurers (Atəsgah Sığorta, Buta Sığorta, Ata Sığorta and AZSIĞORTA) and reinsurance company AzRe have already signed an agreement on participation in MONEY-Market.
Insurance companies will have to define the trading limits for the banks they plan to work with and the list of such banks.
The fee on the operations of the insurance companies in the market will be 1% of the interest income on the transaction.
In accordance with the agreements, insurers get an opportunity to enter the wholesale money bank market as an equal participant together with the banks. The Exchange will provide a new participant with the access to the BEST trading system and will render settlement and information services as well.
Transactions and balances in the segment of the money market are made on the basis of the "Provisional Rules of operations on attraction and placement of funds in the BEST system", "Regulation of trading and settlement in BEST system", "Interim Rules of settlement on credit and deposit transactions concluded within the BBVB trading session in the credit section of organized money market" and "Specifications of financial instruments MONEY-MARKET".
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AZERBAIJANI insurers faced with necessity to change their approach to risk management