1. Center for Economic and Social Development (CESD), supported by Open Society Institute-Assistance Foundation(OSIAF), Presented on July, 20 th, 2011, Azerbaijan

2.  The share of the insurance sector in GDP is 0,4 percent, and insurance premiums per capita constitute 18-19 AZN In Azerbaijan  The average figure of the insurance premiums in the world exceeds 15 times the level of the premiums in Azerbaijan  Non-life insurance leading in the amount of insurance products is a unique feature of the insurance sector  The share of life insurance in general insurance contracts is no more than 5 percent

3.  Life insurance contracts generally have short-term liabilities  Contractors do not quite understand their rights and responsibilities listed in the contract  There are discrepancies in the structure as well as quality of the investment tools in the local market  Insurance rates are low compared not just to developed countries, but even neighboring countries

4.  Despite the numerous laws, legislative database in the insurance sector of Azerbaijan is not in the average level of development  Serious gaps in the law “On Insurance” had also impact on slow development of the insurance sector in comparison with other sectors

5.  There are 28 insurance companies, a reinsurance company, five broker companies ( four with the foreign capital) in the country  Development level of this sector falls 25-30 times behind in comparison with that of in foreign countries  The companies with 1-2 million AZN total capital cannot conduct a professional insurance business with AXA, AIG, Groupama and other companies  Most insurance companies depend on banks in terms of capital

6.  In the country, insurance is generally divided into two fields: Life and non-life insurance fields  In the country beneficiaries of health insurance products are not individuals but companies  Unlike some western countries (i.e. Germany) health services are not fully carried out  Compulsory medical insurance system doesn’t cover insurance of some social diseases  One of the leading insurance types of the market is car insurance  For voluntary insurance, Azerbaijan falls behind even other post- Soviet countries

7.  In Azerbaijan only 20 percent of the total volume of insurance collections fall on the share of compulsory insurance types  Issues on compulsory health insurance reimbursement for the unemployed haven’t been clearly indentified yet  After the law “ On Compulsory types of insurance” goes into effect, totally new trends are expected in the insurance market

8.  Service package of insurance companies includes about 40 insurance types  Insurance services offered in Azerbaijan are fewer in number in comparison with the developed countries  Establishing specialized life insurance companies has not developed the sector  In 2003-2008, 240 percent increase has been observed in the amount of total capital of insurers  Over the last three years insurance fees and payments on the domestic annuity insurance, ability to work insurance, and insurance for incurable diseases have been 0, 00 AZN  In 2008, the insurance companies' total revenues to GDP ratio has not even reached1percent  In the first two months of 2011, out of 27 companies 25 have made payments

9.  There is a discrepancy between the level of development of the insurance market and reforms in the country as well as accelerated dynamics of economic development  The Ministry of Finance shows legislative initiatives in introduction of application of compulsory insurance types

10.  Azerbaijan’s insurance sector has developed not only less than that of in Russia and Turkey, but even Georgia  68% of GDP of CIS countries and approximately 90% of premiums collected in the region belongs to Russia  In comparison with other types of insurance, medical insurance in Georgia is developing more dynamically  Foreign capital has a large share in the insurance sector in Turkey

11.  Not establishing National Reinsurance Company creates difficulties in establishing reinsurance in accordance with modern standards  There is no necessary legal database for development of life insurance  Companies do not have opportunities to direct their free resources to purchase shares and securities  Application of health insurance hasn’t been realized  Foreign companies are not allowed in the market

12.  Extension of the application of health insurance  Development of life insurance  Application of WTO standards/criteria  Restoration of ‘insurance culture’ of people  Use experience of Russian insurance companies  Serious reforms in the health sector  Changes in legislative acts

13. Thank you for your attention! Vugar Bayramov Leyla Aliyeva www.cesd.az