Elmar Mirsalaev: “Our insurance sector is moving with confident steps towards continuous and stable growth”

- The consolidated indicators of the insurance sector for January-November 2024 have been published. To what extent are access to insurance services, as well as trust and interest in insurance, reflected in the current overview figures? And what reforms have been implemented over the past period to ensure the growth of the industry?

 - The Central Bank of the Republic of Azerbaijan presented the insurance market information for January-November 2024. The obtained result is encouraging in terms of the sustainability of the growth trend. Thus, during the reporting period, the collection of insurance premiums in the local insurance market was realized in the amount of 1 billion 222 million 166 thousand manats. This is 10.3% more than in the same period last year. Fortunately, a corresponding increase is also observed in insurance payments. In this sense, for insurance cases that occurred in January-November of this year, insurance payments were made in the amount of 694 million 53 thousand manats, which is 39.5% more than in the same period of 2023.

In addition, it should be noted that the growth of fees was influenced by most types of insurance offered by our sector. The types of insurance that play an active role in the growth of the industry include Cumulative Life Insurance (with an increase of 84.3 million manats), Voluntary Motor Insurance - Casco (with an increase of 10.9 million manats), Compulsory Motor Liability Insurance, OSAGO (with an increase of 6.4 million manats), as well as such a type of compulsory insurance as Insurance in case of loss of professional ability to work as a result of accidents and occupational diseases (with an increase of 5.1 million manats).

I would like to especially emphasize that the dynamic and systematic growth recorded in the sector is a clear indicator of the targeted regulatory policy of the Central Bank of Azerbaijan, which is the supervisory authority of the insurance sector in our country.

Over the past period, the Central Bank of Azerbaijan, with the direct participation of the Azerbaijan Insurers Association and other participants in the insurance market, has implemented specific reforms that have stimulated the development of the insurance sector.

First of all, we can give an example of innovations in life insurance, which has been a hot topic lately. Thus, by the decision of the Central Bank of Azerbaijan, amendments and additions to the "Rules for Life Insurance of a Borrower against Death or Disability" and "Rules for Credit Risk Management in Banks" were approved. The relevant regulations expanded the scope of coverage of the life insurance product for consumer loan borrowers and simplified the conditions for access to the product. We believe that this updated product "Credit Life Insurance", which is already at the service of consumers, will provide optimal conditions for the life risks of our citizens, and will also contribute to the gradual elimination of the problem of bad credit history in our country.

Looking back 2 years, we can note the reform carried out to eliminate a long-standing problem related to real estate insurance. Thus, from June 1, 2023, insurance policies for compulsory real estate insurance and compulsory civil liability insurance related to the operation of real estate began to be issued in electronic form. Also, from that date, the process of electronic information integration between the State Service for Real Estate Affairs under the Ministry of Economy and the Compulsory Insurance Bureau was completed, as a result of which a control mechanism related to real estate insurance was formed.

The past period was also marked by a number of reforms related to the insurance of civil liability of vehicle owners. Thus, all insurance companies other than life, operating in our country and having a license to carry out compulsory insurance of civil liability of vehicle owners, have fully ensured the electronic issuance of insurance policies. Also, for the type of compulsory motor third party liability insurance in Azerbaijan, a transition was made to the system of "Direct Settlement of Losses", which still remains a dream for the insurance markets of some developed countries, this allows for a more objective settlement of damages of this type of insurance, thus giving impetus to increasing consumer satisfaction. Another additional innovation was the introduction of new risk coefficients while maintaining the basic insurance premium. This innovation in itself ensured the establishment of a fair approach to insurance.

Of course, the reform of the insurance industry should not be limited to this. The document "Strategy for the Development of the Financial Sector for 2024-2026", developed by the Central Bank of Azerbaijan and aimed at sustainable development of the sector, is very important as a strategic map for the development of the local insurance market. As a result of the points arising from the relevant strategy and planned for implementation in the near future, an increase in the penetration of insurance services by 3 times is expected, and an increase in the share of insurance in GDP to 5% is our main goal and objective.

– We are well aware that the insurance culture in our country is not at the highest level. What is the insurance sector doing in this direction to somehow improve the situation in this direction?

- At a time when financial services are rapidly developing and improving, improving financial literacy, especially in the direction of insurance, a mechanism of socio-economic protection, is a pressing issue not only for today but also for the future. In 2020, the Central Bank of Azerbaijan, the Azerbaijan Insurers Association and the Compulsory Insurance Bureau signed a Memorandum of Understanding "On Mutual Cooperation on the Systematic and Consistent Implementation of Measures to Improve Insurance Literacy through Public Outreach and Education". Thus, for the 4th year in a row, systematic steps have been taken to improve insurance awareness among the population.

As part of insurance promotion measures, active information work is carried out through social networks and the media, and insurance seminars are regularly organized for representatives of various sectors of the economy.

Within the framework of the Memorandum, for the second year in a row, a large "Insurance Festival" is being held in our country, which plays a serious role in raising public awareness of insurance. The results of our work in this direction are reflected in the dynamics of growth of insurance premiums.

- In recent years, the Azerbaijan Insurers Association has been very active in the international arena. What successes have been achieved this year?

- International relations are of great importance, especially in matters of studying world experience and globalization. As an insurance industry, we also develop cooperation with insurance markets of other countries, relying on their best experience in implementing certain reforms, and also share our own developments in this area.

The Azerbaijan Insurers Association regularly works to expand international relations. Serious business relationships have been built with countries such as Turkey, Russia, Uzbekistan, Kazakhstan, Kyrgyzstan, Pakistan, Hungary. We are permanent members of such organizations as the Global Federation of Insurers Associations and the European Insurance Association.

I would like to proudly announce that the mutual cooperation with the Turkish Insurance Union, established several years ago, now covers not only the two countries, but the entire Turkic world. Thus, within the framework of a joint initiative of our Association and the Turkish Insurance Union, in May 2022, for the first time in the world, the "Insurance Union of the Turkic World" was created with the participation of insurer associations of Azerbaijan, Turkey, Kazakhstan, Kyrgyzstan and Uzbekistan. It is gratifying that the Union we created soon attracted the attention of the Organization of Turkic States, and today, based on the initiative of the UTG, we are working to include the "Insurance Union of the Turkic World" in the UTG. We believe that this Union will create new opportunities for the development of insurance markets in the countries of the Turkic world, and we are glad that our Association, representing Azerbaijan in this global project, plays the role of a strategic partner.

We finally managed to restore the annual Azerbaijan International Insurance Forum, this year it was the tenth. For the first time, we held an international InsurTech summit dedicated to new insurance technologies. Such international events are a kind of opportunity to study the best world developments in the insurance sector.

- At the beginning of our interview, you analyzed the insurance review for 11 months of the current year. I wonder what your forecasts are for the end of 2024?

- Today, we can confidently say that our insurance sector is moving forward with confident steps towards continuous and stable growth. We believe that we will observe this growth trend in the coming periods as well. The target growth indicator of the insurance sector in the documents "Socio-Economic Development Strategy of the Republic of Azerbaijan for 2022-2026" and "Azerbaijan 2030: National Priorities of Socio-Economic Development", which define the main growth rates and targets for the country's economy and financial system, were approved by the head of state. It is set at 10% for the insurance market. I am pleased to announce that this is the second year that the insurance sector has exceeded this target minimum. Thus, the market growth in 2022 was 18%, and in 2023 - 26%.

As for expectations for the results of 2024, insurance premiums may exceed 1 billion 400 million manats. This means an increase of more than 10% compared to last year's results.

The observed growth of insurance premiums means that the number of insured people among the population is growing. And if the number of insured people grows, then the trust in insurance grows. We are glad that our citizens are now aware of their risks, can manage these risks with the help of the insurance mechanism and understand that life is comfortable with insurance. We have always understood and believed that strong insurance means a strong economy, and a strong economy means a strong Azerbaijan.