Baku, Azerbaijan, Aug.20
By Ilaha Mamedli - Trend:
Changing of the car market game rules in Azerbaijan continues to have a downward impact on the insurance market of the country.
The growth rate of the Azerbaijani insurance market declined in comparison with previous years due to the tightening of car loans, reducing the volume of imports of vehicles in connection with the transition to the environmental standard Euro-4 since the first of April as well as changes in terms of inspection, says the statistics from the State Insurance Supervision Service under the Ministry of Finance.
"All these factors have weakened the insurance market. First, restrictions in bank lending served to reduce by half charges from voluntary motor insurance CASCO. Second, the elimination of maintenance for new cars has led to a sharp decline in fees for compulsory car insurance OSAGO", told to Trend expert in the field of insurance Khayal Mammadkhanly on Aug. 19.
It is unlikely for the owners of vehicles that received an insurance policy a year ago to update it until the next technical inspection. So, significant growth in the market before the end of 2014 can hardly be expected. Although with the rise of the administrative penalty for the lack of a new insurance policy [50 AZN] this summer an increase in fees for this type of insurance may be expected, Mammadkhanly said.
According to the rules approved by CBA at the end of March 2014 on regulating of credit risks of one or a group of borrowers related with each other, the initial payment on car loans cannot be less than 40, 50 and 80 percent of the value of the purchased car, depending on its price and age at the time of sale. This decision was made due to increased volumes of overdue loans most of which are car loans. Following this decision, the issuance of the loans, provided mostly from the car insurance policy sales, was actually stopped. But this was a temporary phenomenon.
According to the new rules of public inspection of vehicles and their trailers, cars that are four years old will be inspected every two years, cars that are 10 years or older will be inspected once a year.
In 2014 drivers or vehicle owners are required to submit to technical inspection vehicles produced before and including 2003 year, as well as cars produced in 2005, 2007, 2009; buses until 2012 (2012 inclusive) year of release, vehicles with the permissible maximum mass exceeding 3.5 tonnes and vehicles with a certificate of conformity for the safety of special purpose for transportation of hazardous cargo. Vehicle inspection is conducted from the first of January to October 31.
A failed inspection fee is 50 AZN for individuals, 100 AZN for officials and 300 AZN for legal entities.
In January-July 2014 fees for compulsory insurance of vehicles totaled 37.8 million (20.1 percent of the fees for non-life insurance) with payments of 16.3 million (22.3 percent of the payments of non-life insurance), and voluntary motor insurance premiums reached 21.2 million (11.3 percent) with payments of 15.8 million (21.6 percent).
Fees for insurance declined by 0.4 percent with an increase in payments by 16 percent, CASCO premiums saw a 34.6 percent decrease compared to January-July 2013, and payments increased by 4.96 percent compared to the same period of last year.
Within the first seven months of 2014, the insurance market as a whole grew by 9.9 percent compared to the same period of last year. In 2012, the market grew by 60 percent and last year its growth reached 18.44 percent.
In 2012 the main driver of market growth was compulsory insurance, while last year the market growth was mainly provided by voluntary insurance. In the past year the volume of voluntary insurance market grew by 26 percent, while the growth for compulsory insurance totaled 5.64 percent. It has become one of the main differences of 2013 from the previous one.
There are 28 insurance companies in Azerbaijan.
The official exchange rate for August 19 is 0.7842 AZN / USD.
