RELIABILITY, EFFICIENCY AND PROFESSIONALISM ABOVE ALL

Exclusive interview of General Director of Insurance and Reinsurance Company "BE&G", Mr. Elshan Babayev

Mr. Babayev, "BE&G" operates in the insurance market more than 7 years. Which successes did your company achieve for the period of company's activity?

Despite our company was established in 1998 in Nakhchivan under name as Insurance Commercial Company "Nakhchivan" the beginning of company's formation was in 2001-2002 and the head office of the company had been transferred from Nakhchivan to capital of the Republic and renamed into Insurance and Reinsurance Company "BE&G".

Since establishment company's strategy was the rendering of high quality and effective insurance services for population, awarding of trust and positive contribution into development of the insurance business in Azerbaijan.

Our company gives the large-scale spectrum services on 28 types of insurance including property insurance from fire, accidents, transport means, public responsibilities, employer responsibilities, public responsibilities ahead of the third person, from finance, assembling and construction hazards and many others.

How do you consider company's development perspectives in 2005?

Touching the matter of development perspectives for 2005 it is necessary to note that company's striving for development on some directions. Firstly, there should be introduced of new types and services which did not develop in Azerbaijan.

The other direction of development can be seen the company's direction for improvement of already rendered services. At present, there are some measures by improving of providing services on some insurance issues.

At the same time, company's goal is increasing of staff qualification that influence to company's productiveness. Now, we are planning to send our young staff for study into London Insurance Institute (JV) the training of young employees, specialists in the filed of insurance, also there is planned to enlarge of company's agent network.

During the current year our company will continue an active advertising of activity, new services, population enlightenment in the sphere of insurance and so on.

In connection with adoption of Statute about Obligatory Types of Insurance in 2004 in Azerbaijan, we plan to establish the operation with potential customers. In this connection, at present there is carried out the active work including with our colleagues on insurance market regarding the obligatory insurance from fire. The same work is fulfilled within the frame of Insurers Union. As you aware our company is a member of Insurers Union and active participate in all its conferences. Particularly, we often discuss the present problems closely connected with insurance and with obligatory insurance from fires. During our last discussing we have touched this problem objectively. Being as a member of insurance pool which was established, and has been functioning under the Insurers Union and we are ready to participate with our partners - insurance companies which are members of Insurance Pool. At present, there is discussed the different forms of cooperation within the frame of other insurance types.

Our company cooperates with the leading bans of country. In 2005 there is planned the enlarging of mutual relations among our partners and so, to get entrust of new natural persons and corporate consumers.

Some changes will touch of present company's logo. I think that new logo will be clearer reflect our activity and company's goals.

In the nearest time the head office of company will be located in new building which we recently got. At present, there are implemented the repairing works on completion for the sake of long wait removal.

What is your company's role in the economy of country?

At present in the territory of Azerbaijan are operated 30 insurance companies. The charity capital of our company makes approximately 3 bn AZM. These facilities are placed in some leading banks of country that promote to economical and financial activity in the country and provide with stability of our country.

As you aware in the purpose of company's enlargement and development of the insurance business our company opened new branches in the regions, provide with insurance services directed for development of business activity making the main part of State program on development of social and economy infrastructure in regions.

On the other hand it will allow to expand the possibilities of other State program by opening of new working places in Azerbaijan which will take place in election program of the President of the Republic of Azerbaijan Ilham Aliyev.

You touched the possibilities of your company's branch network enlargement, could you please to inform us about it in detail?

Company's development strategy in 2005 closely connected with development of branch and agents network of company. For example, with opening of new branches in Khachmaz and Zakatala-Balakan zone in 2005 we plan to enlarge the company's branch network.

Imagine to yourself that Insurance Companies (IC) today give the whole spectrum of insurance providing only within Baku city. In this case it is not so difficult to ask a question how it will profitable, if IC operate in Baku and insurance something in the Azerbaijan regions? In happening of insurance case is necessary to estimate the situation and calculate the damage on place. This is difficult process. But the presence of branches in the places will accelerate it.

For receiving of customers' trust is not enough Baku operating only. Let's note that the potential of insurance market is higher of our figures because the major part of not assimilated market is outside of the capital and we could not to recognize this type of service as insurance in the province.

For instance, there are fulfilled the large projects in agricultural sphere at State level for development of economy sector, state regularly improves the legislation in the field of taxation, land's privatization, assistance to farmer economies. In this case is necessary the assistance for farmers on insurance of their mission that correspond to development of State program by regions' development.

Since 2002 IRC "BE&G" branches operate in cities like Goychay, Tovuz and Sumgayit. In 2004 there were opened the branches in Lankaran and Gandja.

Taking into account the short term of activity these branches could not reach an expected level of development. The reason is population's distrust into insurance that is negative vestige of past in memory of people about the insurance which existed in Azerbaijan for a long time till Independence getting.



Please tell us about negative and positive aspects in the insurance business?

Taking into account that the insurance market of Azerbaijan is quite young we can say you many negative examples in insurance the main of which is distrust of people into insurance that negatively influence to development of this segment of country's economy. The examples are the low level of population's enlightenment about insurance and some holes in legislation.

Among the other aspects we can note the terms of unfair market competition where for the sake of attract of consumers some insurance companies resort to so reduced tariffs and sometimes to increased commission rewards.

Positive moment in insurance is to be mentioned the increasing of consumers' assurance received the insurance payments that firstly, contribute the covering of property damage to customer and also the increasing of customer's trust level and its close regarding the insurance companies.

We should note that the Ministry of Finance of the Republic of Azerbaijan played important role which activity promoted to positive growth and profitability of insurance business in Azerbaijan: the initiative opening under the State Economy University of groups on studying of Insurance Business, also rendering of technique assistance for insurance companies through realization of seminars and trainings where participated foreign and native specialists in the field of insurance and so on.

Which role does your company feature regarding the life insurance?

In comparison with other types of insurance the life insurance is more large type of insurance. There are successfully used in foreign practices the short-term and long-term types of life insurance, the mix, accumulating and pensioner types of life insurance, including life insurance types from accident. The most developed life insurance types in abroad are accumulating and pensioner. The conditions for development of stated type is stability in State, development of stock exchanges and the presence of securities.

Concerning your question then I would like to declare that we are interested in development of stated insurance types in Azerbaijan. Life insurance is more long-term insurance, therefore under collection of insurance premiums on stated type of insurance is necessary to develop the company's investments possibilities, i.e. insurance company should invest these premiums either into securities or investments projects.

It is necessary to note an important role of commercial banks where the opening of special (investments) accounts for accumulating of money means are suspected to be fulfill the investment of insurance premiums into different funds and projects such as securities, stock exchanges etc.

Economy stability in the country is presence. However (fund, stock and securities) markets are under development. In present year we are going to pay more attention to the article of insurance as well as in operation with the largest corporate customers as with natural persons. There will also be taking into consideration the population's social prosperity.

At present, there is considered the accumulating insurance, i.e. the amount of settlement (insurance premium) is set, and customer pays this amount monthly, once in a year or partly during some years (not less than 3 years). On termination of agreement the insurance company pays the accumulated part of insurance premium and accumulated funds amount from investment of saved part of the insurance premium. This type of insurance has similarity with deposit accumulation in bank. The main difference: if during the agreement terms under review with customer the insurance case happens (death or disability) he will be paid except of insurance premium and accrual from investment facilities for period under review there is paid (in case of insured death the insurance payment is paid to his legal heir) and insurance amount, so, the social safety factor made. However, as I have already emphasized for payment of premiums is necessary the insurance company invested these facilities. At present, this type of insurance is unavailable which connect with population's distrust for concluding of long-term agreement. Probably after reverting of indexed insurance facilities of population rested after Union collapses the trust will back to population in long-term insurance.

The agreements on life insurance should be concluded for 10-15 years. The offered term in 3 years is the minimum which may be profitable for the insurance company.

Which successes did company achieve in 2004?

2004 brought some changes too. Summarizing the results of company's mission for the last year is necessary to note that progressive trend on volume of selected insurance premiums, providing with qualitative service, also timely covering of damages. Taking into account these parameters our company joins to tens of the leading insurance companies of Azerbaijan.

Considering the company's figures we should bear in mind the fact that our company have been operating not so long just since 1998. Nevertheless, specialists of company have large working experience in the field of insurance.

Concerning the figures then the amount of premiums (insurance fee) for 2004 made

11.892.523.000 AZM. Regarding volunteer types of insurance there were concluded in 2004 the insurance agreements from fires for 6.055.476.000 AZM, from crash - 3.643 844.000 AZM, from accidents - 1.401.799 000 AZM, the transport (cargo) - 241.000 AZM, medicine insurance (health) - 76.566. 000 AZM. Concerning the obligatory types of insurance were attracted totally 714.838.000 AZM of insurance fee.

The insurance payments reflecting the level of company's obligations fulfillment for 2004 made 3.127.994.000 AZM. Particularly the payments by insurance from fires made 1.320.487.000 AZM. There is also paid

1.532.827.000 AZM regarding liabilities from accidents, including 714.752.000 AZM by damages of transport insurance (kasko) and 818.075.000 AZM by damages from insurance agreements of civil liabilities ahead of the third person. The payments on agreements insurance from accidents made 210 000 AZM. Concerning the payments on liability types of insurance not only by liability insurance of civil responsibility of auto owners have been paid 2.740.470.000 AZM.

In conclusion I would like to state that the reliability, efficiency and also professionalism in satisfaction of insurance customer needs is higher for us above all. So, we were awarded by Caspian Integration Award in nomination of stability, reliability and responsibility.

Thanks for your interview.