Global Ratings today published its latest Insurance Industry and Country Risk Assessment (IICRA) report on Azerbaijan's property/casualty (P/C) insurance sector, APA-Economics reports citing the rating agency.
We assess the industry and country risk of Azerbaijan's P/C insurance sector as high, in common with Russia and Turkey.
Our high country risk assessment combines our view of the country's risks relating to the economy, politics, financial system, payment culture, and rule of law. We assess the operating environment for Azerbaijan's insurers as challenging, taking into account macroeconomic trends, low insurance penetration, and only moderate premium growth prospects in 2020.
We assess industry risk for Azerbaijan's P/C sector as moderately high, the same level as in Russia, Turkey, and Portugal. In our view of the Azerbaijani P/C insurance sector, we consider its good profitability metrics, given the industry dynamics and product characteristics that support improving earnings. Taking into account the macroeconomic environment as well as declining business activity and GDP growth prospects, we believe insurance spending will remain at $20-$25 per capita, while insurance penetration will be low and close to the five year average of 0.5%. Further growth prospects will largely depend on P/C insurers' ability to leverage anticipated new regulatory initiatives and implement new products in the medium term.