Azerbaijani insurance companies have funds available for investment, but a shortage of suitable financial instruments makes it difficult to invest them effectively, Azerbaijan Insurers Association (ASA) Executive Director Abas Miskarli said.
Report informs that he was speaking at the 12th Investment and Sustainable Development in Microfinance Conference, organized by the Azerbaijan Microfinance Association (AMFA).
According to Miskarli, insurers' main challenge is the limited range of financial instruments available for investing their funds.
"The biggest difficulty for insurance companies is that they have funds but do not know where or in which instruments to invest them. On the one hand, having these funds is encouraging; on the other, the oversight mechanisms are quite complex.
"For example, although government bonds are recognized at 100% of their value, insurers are not allowed to hold a large portfolio entirely in government bonds. Diversification is required in all cases, even when it comes to government bonds.
"Similarly, if an insurer belongs to a financial group that includes both a bank and an insurance company, it cannot hold large amounts of funds with its parent bank because those funds are recognized at a lower level, and so on.
"So there is plenty of money available. If guarantee funds or microfinance institutions meet the relevant rating requirements, I am confident that insurance companies will be more willing to invest in them.
"That is why I reiterate that we have very few instruments available for investing our funds, and these opportunities should be used," Miskarli emphasized.