QUALIFIED INSURANCE SERVICE FROM BASHAK INAM

 

Caspian Energy (CE): Mr. Hasanov, how would you evaluate the condition of the insurance market in Azerbaijan?  What are the rates of its development?

Orkhan Hasanov, General Director of Bashak Inam Insurance Company: The insurance market, like many other industries in Azerbaijan, is in the process of stable development. The period of progress the country is experiencing now influences both the industrial sector, banking and insurance markets. The development of these markets is an inevitable process. The Azerbaijan market has favourable conditions for progressing insurance market. It is important to say that the Insurance Law that serves as a legal framework for Azerbaijan lawyers is still under projection in Turkey. This proves the high flexibility of the Azerbaijan's insurance market and its quick response to changes occurring in the world market. I will not say that the current condition of our market fully satisfies me. But I dare say for sure that there will be a well-run insurance market in Azerbaijan. The most serious problem in Azerbaijan occurred during the period of reorganization when people lost trust to the insurance market and the whole financial sector as well. However, diligent efforts of insurance companies, in particular Bashak Inam, gradually regained the lost positions. The first commercial insurance companies appeared in 1992. The peak of their activity fell to 1996. The new insurance law we follow now was adopted in 1999. This legal framework gave a very serious push to the activity of insurance companies. The drawn up new version of insurance law will be probably submitted to the parliament for consideration during the spring session. It is obvious that development of any sector surely requires laws. I suppose that the present reconsidered and updated insurance law will be an asset to the development of this market, whereas the state creates necessary conditions for that.

 

CE: What niche of Bashak Inam would you like to see in this market?

Orkhan Hasanov: Bashak Inam Azerbaijan-Turkish Joint-Stock Company has been operating in the market for over 10 years. 49% ownership belongs to Bashak Sigorta, the Turkey's largest insurance company. Due to its basic economic indicators the Company enters the list of top companies in the Azerbaijan insurance market. The Bashak Inam's activity does not cover certain narrow-oriented types of insurance as we mainly deal with direct contact to the population. For this reason the Company is progressing simultaneously with the development of the state and is not linked to formation of any given sector. The Company's focuses its activity on the population. There is such notion in the insurance industry as reliability of a company that is defined by its customer portfolio. A company is regarded reliable and expensive when a major part of total payments falls to the share of individuals. Bashak Inam represents such type of companies. We are proud of our socially oriented activity.   

 

CE: Is the presence of foreign capital in the company's equity helpful in your activity, gaining trust of the population and attracting potential clients?

Orkhan Hasanov: Such reliable foreign partner as Bashak Sigorta is a very important factor. Last year we sold Bashak Inam's 73-percent stock to Groupama (France) and we actually became an Azerbaijani-French JV. Groupama is one of the true leaders of the global insurance market. In 2005 its profit reached €6.5 billion. The company's rating is АА+. However, such partnership should not be limited to just financial presence. At the same time, well-run operation, professionalism and experience are much more important for the company that simply financial inflows. This transaction influenced the Bashak Inam's strategy. The approach to personnel undergoes changes; the bookkeeping trends to approach international standards. As a result the Company has quite understandable leading ambitions. The experience of our French partner established in 1900 is going to become an important experience for us. To my mind the foreign presence is a very important aspect for development of a particular company. At the same time it acts as a stimulating factor for successful development of the entire insurance market in Azerbaijan. But I personally stand against control over the Azerbaijan's insurance market being in the hands of foreign companies.

The foreign presence in the company's capital, to some extent, exerts positive influence on gaining trust of the population and attracting clients. A world-famous name matters much for a well-informed person. However, the name of Groupama means nothing to most of people. We use our name to gain the trust of population. The ten-year experience of successful operation in the market along with the amount of our payments is the best advertisement for any insurance company. During the period of 10 years we have became a reliable and famous company in Azerbaijan that made thousands payments. By this reason we have no serious difficulties in attracting the population to work with our Company.

 

CE: What are the basic economic figures of the Company?

Orkhan Hasanov: Due to the economic indicators Bashak Inam enters the list of first top ten insurance companies in Azerbaijan, whereas due to its profitability the Company is among three true leaders. Though the amount of insurance collections enable us to hold either the 7th or 8th place, the correct evaluation of risk and proper financial management always promote enhanced profits for the Company. Thus, in 2006 the amount of Bashak Inam's insurance collections made 2,426 million AZN, whereas payments comprised 1,062 million AZN or 43.78%. 

 

CE: What branch network does the Company have? Are you planning to expand it?

Orkhan Hasanov: The Company branch offices are regional ones located in Lankaran, Ganja, Khachmaz, Zagatala and Baylagan. The number of insurance agents in these regions is nearly 60 people. The coverage is quite wide; therefore new branch establishments are unnecessary now. Bashak Inam is planning to establish a branch office in Nakhchivan in the nearest future.

 

CE: Does the Company plan to enter a foreign market as a representation or a branch office?

Orkhan Hasanov: In 2005 we had a project to open a representation in Georgia. However, by a number of reasons related to the political and economic situation in this country the project was suspended. Anyhow, the project has not been excluded from the agenda as we plan to reconsider it in the near future.

 

CE: What types of insurance does Bashak Inam mainly offer?

Orkhan Hasanov: Bashak Inam offers property, health and vehicle insurance. We also insure electronic equipment, construction and engineering. At the same time we keep on working on new products. Agriculture is a very vast and attractive segment that is included in our near-term plans. Today it is one of steadily developing industries in regions. At the moment there are no insurance companies working in this sector.

Reinsurance service is very strong in Bashak Inam. I dare say with full responsibility that it is Bashak Inam that offers the most exact and serious reinsurance service in Azerbaijan. Many largest insurance companies of Europe know us and we work with most of them in the reinsurance market. It is very difficult now for Azerbaijan companies to enter such a level. We owe reinsurance contracts with foreign companies to Bashak Sigorta, our Turkish partner.

I am thinking about insurance of mobile phones, but at the moment our market is not ready for that. This project might become a reality when a mobile phone will turn from a status symbol to a communication facility.

 

CE: What about starting life insurance?

Orkhan Hasanov: We were considering this project, invited foreign specialists but still have not directly commenced this work. We cannot start working on this insurance type because of incompletely settled task with finance evaluation. This type of insurance implies getting very large sums. Therefore, an insurance company has to properly use and manage this money. Life insurance can either bankrupt a company or bring large profits. The study of the situation requires some time. This type of insurance is in our near-term programme. 

 

CE: Does the cooperation of population with insurance companies expand? Could you make a comparative analysis?

Orkhan Hasanov: As a head of the Company that mainly works with the population I can assure that this growth comprises approximately 25% a year. Of course, the started extension of credits provided by commercial banks has contributed much to this process. However, the population itself understands the urgency of working with insurance companies. People insure real estate, cars, etc., but in comparison with foreign countries the percentage of individuals cooperating with insurance companies is very low in Azerbaijan. The per capita insurance fee in Azerbaijan is 12 USD, whereas in USA, for instance, this figure amounts to 5,000 USD. This can be explained by poor information awareness of the population along with financial problems and lack of trust.

 

CE: What is your company's motto? Did Bashak Inam succeed in achieving its goals?

Orkhan Hasanov: Our Company's motto is Qualified Insurance Service. This is a primary objective in all divisions of the Company. The offered services comply with highest quality standards as proved by getting ISO certificate in 2005.

In the near future we are going to involve one of the famous companies to carry out audit. I think it will be one of the most significant requests of the French partner and we are ready for that.

Surely the Company has both near-term tasks and strategic objectives. To become a leader in the market is our strategic aim. To maintain leading positions, to render more reliable service, to improve our work and make customers pleased with our activity are our near-term goals. I think most of our near-term objectives have been already achieved.

 

Our work along with the results achieved enables me to say for sure that in the near-term outlook Bashak Inam will be among the first five leaders of the Azerbaijan's insurance market. The recent steps of the government regarding the enhanced care about the non-oil sector create great possibilities and conditions for Bashak Inam. I will not lose this chance.