The insurance sector of Azerbaijan rose to the fourth place in Commonwealth of Independent State on account of higher disposable income and economic growth.

The Economic Development Minister of Azerbaijan, Heydar Babayev, said that the insurance market of Azerbaijan has risen to fourth place in the Commonwealth of Independent States (CIS), with Russia, Ukraine and Kazakhstan at the first, second and third places respectively, as reported by USACC.

The insurance companies of Azerbaijan had a total authorized capital of AZN 63.4 Million (US$ 78.70 Million) last year. Besides, the insurance sector during the first quarter of 2008 grew by 35% and had a share of 0.61% in the total GDP during the same period. The per capita insurance premiums in 2007 reached AZN 17.2 (US$ 21.35). As per the information for the first six months of 2008, the country’s GDP and industrial sector grew by 15% and 17% respectively.

Azerbaijan’s insurance sector is showing positive growth prospects, such as rising average household disposable income and prospects for sustainable economic growth. Hence, these factors are pushing up the insurance sector in the country.

Moreover, the government enacted a law on Insurance Activity in 2008 that fulfills the European Commission obligations. The new law also boosted growth in the insurance sector in the country.

Also, the Azerbaijani Republic’s growing economy, rich oil sources and legal framework to increase private investment are creating more growth opportunities for the insurance industry. Furthermore, the short period insurance schemes are making strong positions in the financial market and the country’s economy.

However, the sustainable growth in Azerbaijan insurance sector needs more competitive business conditions. Besides, it requires the experience of other insurance markets in Europe to move on in the right direction. Also, the life insurance segment of Azerbaijan insurance sector needs to be established with support of financial and corporate sector of the country.

According to a Research Analyst at RNCOS, “Insurance market of Azerbaijan has good growth prospects. But there is a need to make the insurance sector more competitive for long-term sustenance of growth. Moreover, the sector must gather information like other international insurance markets on present market trends to utilize it for developing the industry.”

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