The government of Azerbaijan plans to increase the share of the insurance market in the country’s non-oil GDP to 1.4% until 2020, the Strategic Road Map for Development of Financial Services in Azerbaijan said.
Azerbaijan’s Financial Markets Supervision Chamber, which regulates the insurance market, said that the share of the insurance market in GDP was only 0.8% in late 2015.
“Despite stable growth of the insurance market in recent years, its impact on the economy and the financial sector of Azerbaijan is minimal”, the document said.
As one of the reasons for this, the authors of the road map indicate that the participants of the insurance market don’t have sufficient information about the risks present in other sectors.
As a result, insurance companies are simply not interested in preparing products for these sectors. For example, agriculture is the most challenging insurance segment, and it requires special knowledge of possible risks in this area.
“Also, insurance companies are not very interested in preparing products for economic groups or sectors with high risk or low investment”, the document reads. “For example, insurance companies try to avoid rendering services to individual farms because of their low yield or small and medium-sized enterprises because they are more prone to bankruptcy”.
In general, for the development of the Azerbaijani insurance market in 2017, the country’s Financial Markets Supervision Chamber, together with the ministries of finance, economy and agriculture, plans to establish a working group and check the entire insurance market.
Later, during 2017-2020, it is planned to create an information system of the insurance market and to prepare an action plan for the development of this market in Azerbaijan.
The development of the insurance market will ensure Azerbaijan’s GDP growth by 125 million manats. (Trend/Business World Magazine)