"Insurance in Azerbaijan: New perspectives" Conference works are continuing today in Baku. The second day of the event is dedicated to the new opportunities for MTPL market in Azerbaijan.

Read here the main statements:

Vladimir STEJSKAL,Head of Analytics, Central and Eastern Europe, Nordic, Greece, Cyprus and Middle East, AON Benfield, Czech Republic

• A natural catastrophe is a major adverse event resulting from natural processes of the Earth. It can cause loss of life or property damage.
• The natural catastrophes can be classified as geological (earthquake, volcanic eruption, landslide), hydrologic (flood, tsunami), meteorological, (thunderstorm, hailstorm, tornadoes etc.), wildfire and space disaster (solar flair, asteroids)
• 2017 was exceptional year in terms of catastrophe activity with overall amount of insured losses of 134 billion USD in comparison to 56 billion in 2016
• The annual proportion of non-insured losses varies between 60-80%
• Commercially available cat models appeared on the late 1980s in the USA. The demand for this type of solution significantly increased after the 1992 Hurricane Andrew when the US market saw 11 insolvencies. In 2005, after Hurricane Katrina, only 3 insolvencies took place despite considerably higher financial impact of the event
• Reinsurance was the first segment of the insurance industry that adopted the catastrophe models. Catastrophe treaties can be hardly structured and placed without the modelling
• The most common output of the cat modelling is Probability vs Modelled loss
• The goal of cat modelling is to estimate possible losses while minimizing uncertainties.

Christopher GENILLARD, Managing Director, Genillard & Co, Germany

• Challenges for agriculture insurers: climate change, remote sonsors and big data for insurance
• The trend is towards the developments of multi-peril products
• Internationally, 3 markets account for 2/3 of the global agricultural insurance premium: USA 11,47 billion USD GWP vs China 7.71 billion USD
• In the EU, Spain is the biggest insurance market with 647 million EUR with a total EU market in excess of 2 billion EUR
• Farming itself is changing rapidly from traditional small and medium size farmers to industrial enterprises with large-scale farming
• In order to combat the protection gap with start with a holistic risk analysis, then we create the technical base tools to understand the risks. we then evaluate and model the entire spectrum of natural perils and commercial risks to which crops are exposed, including those stemming from climate change. We then forge a PPP involving national insurance industry and other relevant and Governmental stakeholders in order to design a complete risk profile and a model
• Agriculture is very important for Azerbaijan with 55% of the total area being suitable for this purpose.
• Today, most farmers in Azerbaijan have no crop insurance and therefore no access to credit. A compulsory pubic-private solution makes absolute sense. A state programme and Law is underway to remedy this situation through creation of an agriculture insurance pool in 2019

Firdovsi AGHASHIRINOV, Senior Specialist, Financial Markets Supervisory Authority, Azerbaijan

• There are 2 strategical roadmaps that we follow in order to introduce agricultural insurance in Azerbaijan
• Our target is to establish effective, flexible, durable and reliable agricultural insurance system in the country
• Reasons to develop agricultural insurance in Azerbaijan: increase production, to increase the GDP level, to reach the growth in the share of the non-oil system, increasing food security, to increase investments in agriculture and to improve the lives of farmers
• Until now we have established a Task Force after consulting the international experience; we have chosen a model and then drafted the Law on "Agricultural insurance"
• In 2017, the agriculture insurance market reached a GWP of 4,3 million AZN with a market share of 0,8%. Loss ratio is 96%. 4 insurance companies sell these products.