Insurance in Azerbaijan

As an economic category insurance, which is part of the financial system, is the foundation and utilization process of the targeted finance funds established to eliminate the damage from the unpleasant accidents and emergency, to provide financial support to the citizens in the accidents connected with their private lives. The development of insurance in Azerbaijan passed 3 stages: before the October revolution in 1917; after the revolution (1917-1990) and the modern period since 1990. 

The organization of insurance work began in Azerbaijan from the mid-XIX century. The formation of the insurance system in Azerbaijan is closely connected with the development of capitalism, the formation of oil industry, and the development of entrepreneurship. The affiliates of the companies from the foreign countries were operating in Azerbaijan at that period. The affiliates of the “LLoyd” English company, which was specialized on the insurance of vessels, as well as two representative offices of “Russian-Lloyd” and the English company from Germany, “Northern German LLoyd” presented with the “Repman and Rust” trade house, which mainly dealt with the insurance of the cargoes transported till thr border ports of Russia and Iran, “German, Livanty line” society that realized the insurance of the vessels and cargoes, began operating in the country.

In 1910, there were 18 insurance companies in Baku. The largest company was “Russian insurance society”. The foundation of insurance activities in Baku was the insurance of the vessels in the Caspian. 

Like in other Republics of the USSR, state insurance system was established in Azerbaijan during the Spviet period. Azerbaijan SSR General State Insurance Office and Baku Office of the  USSR “Ingosatrax” that played an important role in the development of insurance system, were operating in Baku .

The cooperative insurance aws realized via the Sentrsoyuz consumption cooperation, which was closed in 1931. Then the insurance oprations were centralized in the State Insurance. Till the late 1980s, the insurance activities in the Republic were under the monopoly of two insurance organizations- State Insurance Company of Azerbaijan Republic and the Baku office of USSR foreign state insurance organization. 

The insurance work developed in the country independently after 1990. State Insurance Control under the Cabinet of Ministers of Azerbaijan Republic was founded in 1991. The duties of the organization were to regulate the insurance service market in the country, to defend the interests of the insurer, insured, and the state, to exercise methodical management, to prepare the relevant normative and legal documents.

The national insurance market in Azerbaijan was formed in the early 1992. In January 1993, Azerbaijan Parliament adopted the Law of Azerbaijan Republic “On the insurance” for the first time in Azerbaijan history. 

Now, the insurance market is in the stage of development. The insurance companies offer more than 40 obligatory and voluntary insurance forms. However, this is not enough. Comparatively in the developed countries, more than 300 various insurance services are provided. 

In 1991, there were 62 insurance companies- 53 national, 9 joint companies in Azerbaijan. As a number of insurance companies could not gain the confidence of the insured people, 33 of them went bankrupt and stopped operating. In the early 2006, there were 29 registered insurance companies in Azerbaijan and 22 of them were private and 6 state commerce company with mixed property. 

In 2010, the total amount of the companies was 155.59 million AZN. In January-February 2011, the total amount of the the total amount of insurance premiums of the companies was 66.342 million AZN and the amount of the payments was 17.673 (increase 21.71%) million AZN.