Life insurance market shows increasing rate in Azerbaijan

By AzerNews

In coming years, experts forecast the fastest growth in Azerbaijan's financial services sector in the insurance sector -- a projection supported by the recent introduction of numerous compulsory insurance mechanisms as well as changes in the attitude of people and businesses to insurance.

Life insurance occupies a special place in the insurance market. Today this segment is considered to be one of the most popular ones in Western Europe and other countries with developed insurance markets. In fact, life insurance can be seen as a proven way to solve many challenging problems that can face everyone: it means financial relief for the family in case of a tragedy like suicide of one of its members, and guaranteed accumulation of the required amount at the time it is urgently needed.

In European countries, the share of premiums for this instrument totals an average of 55-60 percent of the total premiums. In Azerbaijan, the figure was only 1 percent in 2009 and 2010 and it increased to 2 percent in 2011.

A significant increase was recorded in the local life insurance market last year. The volume of collected premiums on life insurance grew by 63 percent and that of payouts surged nine-fold. This evidences an increase in public awareness regarding life insurance and its benefits as well as an increase in real demand for this type of insurance.

According to the domestic legislation, only specialized companies can offer life insurance in Azerbaijan. Currently, several types of life insurance are offered in the country: insurance in case of death, annuity insurance, disability insurance, insurance against incurable diseases, lifetime insurance and compulsory insurance against disability resulting from occupational diseases and industrial accidents. The last two insurance types are the most widely used.

According to the March report of the Ministry of Finance, three companies eligible to provide life insurance in Azerbaijan - Pasha Heyat, Ateshgah and Qala Heyat - collected 20.68 million manats (about $26.34 million) on all types of life insurance in January-March 2013, which is more than double the amount reported for the same period of last year.

Also, an increase on payments for life insurance was recorded: compensation amounting to 1.087 million manats was paid out in January-March 2013, which is 4.57 times more than the figure for the same period of 2012.

Some 8.57 million manats were collected on the compulsory insurance of disability resulting from professional diseases and accidents at work in the first three months of 2013. The figure exceeds the indicators for the same period of last year by over 77 percent.

The fees on voluntary life insurance have increased by 2.57 times within a year and reached 12.11 million manats. Most of the fees in the life insurance field fall to the share of insurance on survival (11.156 million manats), while the rest of the fees were charged under life insurance in the case of death and insurance against incurable deceases.

The fees on voluntary types of life insurance in January-March were paid in the amount exceeding 801,680 manats and on legally required insurance the figure made up 284,570 manats.

The total volume of premiums of all companies operating in the country amounted to 102.23 million manats according to the indicators for the first three months of 2013 (a 25.22 percent increase within a year).