AzRe chief: Azerbaijan needs greater insurance awareness

A large part of the population and some companies in Azerbaijan view insurance as a regulatory requirement rather than a tool for transferring risk.

Report informs that Vusal Abbasov, Chairman of the Management Board of AzRe Reinsurance OJSC, said this during a panel discussion held as part of the 11th Azerbaijan International Insurance Forum in Baku.

According to him, increasing insurance literacy and awareness is therefore the number one challenge facing the insurance market, the regulator and all parties involved in the development of the insurance sector.

"The second challenge, in my opinion, is related to diversification. Yes, the market is growing. I think we passed 1 billion manats ($588 million) two years ago, and now we are at the level of 1.5 billion manats ($882 million). We hope to reach 2 billion manats ($1.18 billion). However, when we look at the structure of the portfolio, dependence on certain products is visible. Life and savings insurance, compulsory motor insurance and health insurance are the three largest business lines dominating the market. When competition is concentrated on one, two or three specific products, profit margins narrow due to increased competition. We need to expand our services into more diversified business lines," Abbasov said.

He believes that, from this point of view, it would be advisable to divide the entire portfolio into retail, corporate customers, bancassurance and compulsory insurance categories.

"What problems exist in all four groups? For the retail business, I think our market needs more data analysis, more technology and more digital services. The second challenge on the retail side is related to the agency network. We must admit that our agencies and intermediaries are still in the development process, and a lot of work remains to be done. There are also emerging risks, such as cyber insurance and other technology-related risks, which we can offer to our customers. In Azerbaijan, banks are used as a sales channel, but mainly for collateral held by banks. I think we can expand this cooperation between insurers and banks and use banks as a channel so that insurance becomes an additional source of income for banks, rather than merely a way to insure their own collateral," he said.