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Azerbaijan Life Insurance & Bancassurance Market
Highlights
Tatiana Savelyeva
Azerbaijan International Insurance ForumJuly 3, 2015
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About Qala Life Insurance
• “Qala Life” is one of the first Life Insurance companies of Azerbaijan which received the license for life insurance operations, including compulsory life insurance. Currently – one of the three life insurers. Only life insurance, no non-life operations in the group
• Products include compulsory life insurance and voluntary life insurance (corporate endowment, credit life insurance, group and personal term life).
• “AzRe” is the founder of “Qala Həyat” Insurance Company. “AzRe Reinsurance” OJSC, being the first and the only reinsurer in Azerbaijan, has one of the largest authorized capital among insurance organizations in the country. Combined capital for AzRe and Qala Həyat constitutes over 47,5 mln AZN, 7,5 mln AZN of which is for Qala Həyat.
• Gross written premium in 2014 was 25,16 mln AZN, including 7,13 mln AZN for compulsory insurance. Growth against 2013 was 2,5 times, and 14,2% for compulsory line.
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Bancassurance at Qala Life
Consumer credit life insurance7 banks, 4 of which already use online point-of-sale system
Life insurance for card holders, auto credit life insurance – not commonly offered at the market
Mortgage life insurance20 banks, 15 of which already use online point-of-sale system
Credit life only, developing products for bancassurance channel not linked to credits
Life risks only
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Major players in Life / Bancassurance market in Azerbaijan
•3 life insurance companies
•25 non-life insurance companies
•45 Commercial banks
•157 Non-banking credit organizations, incl. 104 credit unions
•State pension fund
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Life insurance market in Azerbaijan
40%
36%
24%
Paşa Həyat - 41,90 mln AZN
Atəşgah Həyat - 37,93 mln AZN
Qala Həyat - 25,16 mln AZN
0% 50% 100% 150% 200% 250%
250.00%
59.75%
19.84%
Gross Premiums Written in 2014 + dynamics vs 2013
Claims Paid in 2014 + dynamics vs 2013
270%
960%
480%10%
84%
5%Paşa Həyat - 2,87 mln AZN
Atəşgah Həyat - 24,14 mln AZN
Qala Həyat - 1,57 mln AZN
Source: Azerbaijan Insurers Association
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COMPULSORY 27%
16%
57%
0%
Insurance against death - 16,69 mln AZN
Endowment insurance - 59,50 mln AZN
Critical illness - 0,46 mln AZN
Life insurance market in Azerbaijan
Compulsory Insurance - 28,34 mln AZN
Voluntary Insurance - 76,65 mln AZN
Insurance against death - 16,69 mln AZN
Endowment insurance - 59,50 mln AZN
Critical illness - 0,46 mln AZN
0 0.5 1 1.5 2 2.5 3 3.5
13.88%
74.65%
280.00%
57.85%
330.00%
Gross Premiums Written in 2014
Dynamics 2014 vs 2013
Source: Azerbaijan Insurers Association
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Compulsory Life Insurance for
Employees
Voluntary Endowment Life Insurance
Voluntary individual insurance (including
bancassurance, critical Illness, etc.)
Group life insurance
Life insurance products in Azerbaijan
84%
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Voluntary Endowment Life Insurance
Benefits for Employee Benefits for EmployerTax relief:Income tax*: 14% (for salary up to 2500 AZN)Income tax : 25% (for salary exceeding 2500 AZN)Social Insurance payment**: 3%(optional) Social Insurance payment: 22%
Tax relief:
Social Insurance payment**: 22%
Annual interest Bonus and loyalty program, team motivation
Additional benefits: Death : 100% payment of sum insuredDisability : 0 to 100% payment of sum insured
Social guarantees for employees and families
*Tax Code of Azerbaijan Republic – Article 102.1.8; Article 116**Law of Azerbaijan Republic on Social Insurance – Article 15
How it works: part of monthly salary is paid to the life insurance savings account. At the end of contract (min 3 years) the insurance company pays to the client the Sum Insured (total amount of all monthly payments + investment income + tax savings).
Part of monthly salary used to pay life insurance premiums is not taxable.
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Life insurance for consumer loans
Non-life insurance for auto loans (motor hull,
MTPL)
Non-life insurance for mortgage loans
Bancassurance products in Azerbaijan
Life insurance for mortgage loans
?Life insurance for motor loans?
??
?Life insurance for credit cards?
??
?Not credit-linked life insurance?
??
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Factors that shape credit market
Consumer loans Auto loans
Strong state regulation
Temporary discontinue of issue loans in early 2014, later limit on amount of loans,
Requirement for Min down payment amount increased greatly
Discontinue of all POS loans at the end of 2013
Estimated penetration of life insurance is close to 0%
Estimated penetration of life insurance is about 50%
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Development2013
201440 mln AZN*
2013
2014 97,1 mln AZN* 112,9 mln AZN*
State-Provided and Regulated Funds
10,5 % or higher 4 % & 8 %
Availability for Clients
Complexity of Process
Loan Interest
Description
State
Private Banks Provided Funds
Max Loan Amount50K AZN
Term of LoanLonger Shorter
Private∞
Market Domination
Sellers Market Buyers Market
Mortgages in Azerbaijan Penetration of life insurance is
100%
Source: www.cbar.az, Azerbaijan Mortgage Fund under Central Bank of Azerbaijan Republic (AMF)
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Insurance rates – regulated by Ministry of Finance since January 1, 2015
Point-of-sale electronic systems for bank branches
Historically level of commissions is low considered to neighbor markets, but growing
Competition by price became impossible
Competition on the side of
commissions
Competition by service
• Banks consider life insurance more as a risk protection rather than source of
commission income
Refuse to sell life insurance for products with low risk for the bank (e.g. motor
loans where liquidity of the pledge is high)
Banks are not keen on selling not credit-linked
products
Life insurance penetration for motor loans is close to 0%
Key features of local life bancassurance market
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Product possibilities for bancassurance
Fraud for card holders Travel Insurance Investment
insurance
Property for individuals
(boxed)
Title insurance for mortgages
Involuntary Loss of Emloyment
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• Develop service for the banks: online point-of-sale systems, point-of-sale underwriting, tele-underwriting
•Target client segmentation – tailored products for mass, affluent, high net worth segments
•Training: tailor-designed training programs for bank sales employees, sales incentive programs
• penetration in consumer loans, penetration in auto loans
•Offer life protection for credit card holders
•Develop deposit-linked insurance products (one step further – insurance products not linked to banking products)
•Develop new covers for existing segments (CI, loss of employment, etc.)
•Bundle life covers with non-life new risks (GAP, travel insurance, surgery benefits, etc.)
Products
Cooperation with banks
Future possibilities for life bancassurance
Tbilisi pr-ti 1058, Bakı, AZ 1122, Azərbaycan, tel/faks: +994 12 404 74 44, +994 12 441 40 [email protected], www.qala.az
Thank you
Tatiana Savelyeva
Member of the Management Board, Head of Underwriting and reinsurance department“Qala Life” Insurance Company OJSCPhone/Fax: (+994 12) 404 77 74, ext.110 Mob: (+994 50) 484 75 95e-mail:[email protected]
