Premium of Azerbaijan insurance industry surged by 35% in the first quarter of 2008 as car insurance claims increase alongwith improvement in services.

According to the Finance Ministry of Azerbaijan, the insurance sector in the country experienced 35% growth rate in premiums during the first quarter of 2008, as reported by ABC.AZ.

The Ministry also said that the Azerbaijan insurance sector grew 62.7% last year. This year’s first quarter premiums accounted for 35.4% of the last year’s premium. Besides, the total insurance compensation payments made in the first quarter of 2008 were of AZN 8.45 Million against AZN 7.33 Million in the corresponding period last year.

The rise in the automobile insurance premiums is based on various reasons. Car insurance premiums rose mainly on increased accidental claims because the number of cars is increasing with rising disposable income of people. Existing cars are made of expensive secondary security systems, higher crumple zones, and lightweight stuff that altogether have increased the compensation payments made by the insurance companies. This has led to surge in the car insurance premium.

Furthermore, the Azerbaijan insurance market is also increasing consumer spending, which is getting support from spurge in people’s disposable income of households. The stable and sustained growth in the insurance sector is also boosted by growth in insurance services that are ensuing continuous expansion of other segments including vehicle insurance, accidental insurance and health insurance. Hence, the premium of the insurance industry is experiencing continuous surge.

However, the Azerbaijan insurance industry is in the first phase of growth and will come across many potential business challenges such as shortage of professionals in life insurance. This shortage is severely hampering the life insurance segment compared to other segments of the industry. Other factors include weak marketing strategies and promotions, and bad management that altogether posing great challenges before the industry.

According to a research analyst at RNCOS, “The Azerbaijan insurance sector is strongly growing and has a bright growth prospects ahead. Its time for insurance companies to capitalize the market by implementing right business and marketing strategies including full-scale information about products. Development of staff potential is also necessary to maintain the stable growth in the life insurance segment.”

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