Insurance turning into profitable sector in Azerbaijan

The insurance business has turned into a profitable field in Azerbaijan, a conclusion enabled by estimates of government experts.

30 insurance companies operating in the country collected 147 million manats ($169 million) in fees but paid out only 35 million manats ($42.1 million) last year, according to the Finance Ministry. Thus, companies working in the field are channeling only a minor amount of the funds into insurance contributions. Only one company’s payments exceeded collections by three times. The high rate of collection is due to high risks involved.

The most lucrative transactions in Azerbaijan’s insurance sector are related to life insurance, as they bring up to ten-fold revenues to businesses. Only 20% of collected funds are repaid to citizens.

In 2007, a great number of people signed up for real estate and car insurance. However, car insurance does not bring considerable profits to companies due to frequent accidents. Up to 50% of the fees collected were repaid to vehicle owners last year.

It is indicative that despite increasing public interest in insurance, the payments made to the population are decreasing. Whereas companies’ collections rose 63%, payments went down 20% last year.*