STATISTICS: AZERBAIJAN, 1H2016: Insurance business is directly dependent on banking sector; for 3 insurers and 88 intermediaries were revoked licenses'

29 September 2016 —
During the first six months of 2016, the Azerbaijani insurance industry grew, in local currency, by 17.72%. Due to strong devaluation of the local currency (AZN) against USD/EUR, by almost 45%, in the European currency the insurance market decreased by 19.18%.

In context of the weakening national currency, the non-life insurance segment is still in recessions and the insurance business is directly dependent on the banking sector, given the affiliation of several insurance companies to the banking system. As known, during last year the banking system of Azerbaijan has seen revoked licenses' for 10 banks.

The banking sector's problems have affected the insurance sector as well. ALFA Insurance has been declared bankrupt on August 29th. Given the bankruptcy of its sole owner, Texnikabank, ALFA Insurance's financial situation became even more critical, as no capital injection was possible.

Moreover, the financial authority took several measures in order to strengthen the financial stability of the market. For example, transfer of the insurers' capital in parent banks will no longer be taken into account as investment of the insurer. Earlier, insurers placed statutory capital and reserves in their parent banks, passing them off as investments.

In the reporting period, in Azerbaijan have been operating in total 28 insurance companies, for three companies (QARANT Sigorta, ERA-TRANS Sigorta and CHARTIS Azerbaijan) licenses being revoked. The supervisory authority has also revoked the licenses of 88 insurance intermediaries (two legal entities, 86 individuals).

M&A operations are also part of the current market reshape, BUTA Sigorta transferring its insurance portfolio to GUNAY Sıgorta. On the other hand, QALA Sigorta, daughter company of leading reinsurer AzRe Reinsurance's, has received a license to enter on the MTPL market.

The share of Azerbaijan's leading insurance companies (TOP 5) in terms of GWP increased from 57.63% to 64.35% in the first half of 2016.

Access and download the 1H2016 Azerbaijani insurance market statistics.

Note: A full version of comprehensive analysis of Azerbaijani insurance market's performance for 1H2016 will be available in the forthcoming edition of the XPRIMM insurance Supplement - Azerbaijan, to be relased in Baden Baden, on October 23rd, 2016, on the occasion of the XPRIMM Reception and AZERI Evening.