Center for Economic and Social Development (CESD), supported by

Open Society Institute-Assistance Foundation(OSIAF), Presented on July, 20th , 2011, Azerbaijan

The share of the insurance sector in GDP is 0,4 percent, and insurance premiums per capita constitute 18-19 AZN In Azerbaijan

The average figure of the insurance premiums in the world exceeds 15 times the level of the premiums in Azerbaijan

Non-life insurance leading in the amount of insurance products is a unique feature of the insurance sector

The share of life insurance in general insurance contracts is no more than 5 percent

Life insurance contracts generally have short-term liabilities

Contractors do not quite understand their rights and responsibilities listed in the contract

There are discrepancies in the structure as well as quality of the investment tools in the local market

Insurance rates are low compared not just to developed countries, but even neighboring countries

Despite the numerous laws, legislative database in the insurance sector of Azerbaijan is not in the average level of development

Serious gaps in the law “On Insurance” had also impact on slow development of the insurance sector in comparison with other sectors

 

There are 28 insurance companies, a reinsurance company, five broker companies ( four with the foreign capital) in the country

Development level of this sector falls 25-30 times behind in comparison with that of in foreign countries

The companies with 1-2 million AZN total capital cannot conduct a professional insurance business with AXA, AIG, Groupama and other companies

Most insurance companies depend on banks in terms of capital

In the country, insurance is generally divided into two fields: Life and non-life insurance fields

In the country beneficiaries of health insurance products are not individuals but companies

Unlike some western countries (i.e. Germany) health services are not fully carried out

Compulsory medical insurance system doesn’t cover insurance of some social diseases

One of the leading insurance types of the market is car insurance For voluntary insurance, Azerbaijan falls behind even other post-

Soviet countries

In Azerbaijan only 20 percent of the total volume of insurance collections fall on the share of compulsory insurance types

Issues on compulsory health insurance reimbursement for the unemployed haven’t been clearly indentified yet

After the law “ On Compulsory types of insurance” goes into effect, totally new trends are expected in the insurance market

Service package of insurance companies includes about 40 insurance types

Insurance services offered in Azerbaijan are fewer in number in comparison with the developed countries

Establishing specialized life insurance companies has not developed the sector

In 2003-2008, 240 percent increase has been observed in the amount of total capital of insurers 

Over the last three years insurance fees and payments on the domestic annuity insurance, ability to work insurance, and insurance for incurable diseases have been 0, 00 AZN

In 2008, the insurance companies' total revenues to GDP ratio has not even reached1percent 

In the first two months of 2011, out of 27 companies 25 have made payments

There is a discrepancy between the level of development of the insurance market and reforms in the country as well as accelerated dynamics of economic development

The Ministry of Finance shows legislative initiatives in introduction of application of compulsory insurance types

Azerbaijan’s insurance sector has developed not only less than that of in Russia and Turkey, but even Georgia

68% of GDP of CIS countries and approximately 90% of premiums collected in the region belongs to Russia

In comparison with other types of insurance, medical insurance in Georgia is developing more dynamically

Foreign capital has a large share in the insurance sector in Turkey 

Not establishing National Reinsurance Company creates difficulties in establishing reinsurance in accordance with modern standards

There is no necessary legal database for development of life insurance

Companies do not have opportunities to direct their free resources to purchase shares and securities

Application of health insurance hasn’t been realizedForeign companies are not allowed in the market

Extension of the application of health insuranceDevelopment of life insuranceApplication of WTO standards/criteriaRestoration of ‘insurance culture’ of peopleUse experience of Russian insurance companies Serious reforms in the health sector Changes in legislative acts

Thank you for your attention!

Vugar BayramovLeyla Aliyevawww.cesd.az