Londongate is a British-Azeri joint venture.
What motivated to establish such a JV?
Londongate was established in 1997 in London.
It was a market need of some British companies
such as BP and other subcontractors that have
made investment in Azerbaijan. That is why we
created Londongate in London and established it
not only in Azerbaijan but also in most CIS countries.
In 1998 we established the company in Azerbaijan
and started work in 1999 actually. In 2000 we
became #4 insurance company in Azerbaijan and
we are still going up.
Insurance market in Azerbaijan is quite new.
Do you think the sector still needs any major
restructuring to make it more transparent and
competitive?
Actually, insurance market in Azerbaijan has
experience and it is growing very well and very
fast in comparison with other CIS countries. We
have less problems than the companies in other
CIS countries because the structure of the law
is much better in Azerbaijan. The insurance sector
is growing much faster in Azerbaijan. For ex:
In 1998 the insurance market in Azerbaijan was
$5 mn USD. Now it is almost $40 mn.
Private sector insurance is growing very fast
in Azerbaijan. These are life insurance, medical
insurance which government is working very hard
on it.
What kind of insurance you are trying to develop?
We are trying to develop life and medical insurance
and we have been working on it for the last two
years.
Are you more working on the voluntary insurance
than the compulsory insurance?
There is not too many compulsory insurances in
Azerbaijan. The Parliament has approved to have
medical compulsory insurance and property compulsory
insurance for an employee which is going to increase
insurance market almost by 70% or even more.
What are your expectations in terms of new
premiums that you expect to sign for the next
year?
Every year we have a 15-20 percent increase in
income and premium. And if the law on compulsory
property and compulsory medical insurance passes
in the Parliament we are going to have about 600
000 new clients coming to insurance industry and
you don't know how much percentage you can get.
But there is a very high potential of increase.
Do you think new insurance companies are going
to be established or the existing companies in
insurance sector are going to merge to create
more competitivity?
We already have enough insurance companies with
the small market. $40 mn is not a big money for
big companies. It is just 1 day insurance they
may take somewhere else.
In 2000 we had 60 insurance companies and now
we have 29. Because some of them are gone or have
merged. And now we have more solid insurance companies.
But even $40 mn is not a big capital for 29 companies.
I hope to increase the capitalization at least
by $1mn next year. If the capitalization goes
on then we are going to have only 10-15 companies
in the coming years.
|
Since you have a JV with British company do
you have any special agreement on re-insurance?
We don't have any special agreement.We are working
with most British companies and subcontractors
here. And they know what is the re-insurance and
they ask us to certificate our re-insurance. We
mostly do re-insurance through Loyds of London.
We have our own broker in London which is a part
of our group K International (?) and we re-insure
mostly in London with the triple security (?)
The Minister of Finance has declared that
each insurance company should prepare to develop
new services according to requirements of market
economy. Do you think most companies have the
proper means to thouroughly adapt to the current
evolution of the market?
If you want to stay in the market you have to
have all kinds of services. We have a very tight
and small market. If you don't have enough and
necessary services you lose your market share.
Everyone tries to get as much as service they
can have. It is good because it makes companies
more professional and better servicing their clients.
Do you think it is up to the companies to
create a market or the government has responsibility
to do that?
No, I think it is all up to the companies. If
for ex, I don't want to do life insurance nobody
can force me to do that. First I realize the kind
of the service I want to have and then I put the
service in the market.
Are new insurances like a new concept for
the Azerbaijanis?
It is not a new concept. During the soviet union
people knew what was the insurance. But there
was only one company which always got the premium
and never payed it back.
People in Azerbaijan are educated about insurance.
But they don't trust it.
But we work with foreign companies and the employees
of those companies. And when it is necessary we
pay back and we get the client back.
The clients begin to trust insurance companies
and they start to insurance their household, cars,
etc.
Are you more geographically focused on Baku
or also outside?
When we are in London we are thinking about the
whole group. We have some experiences because
all the CIS countries have the same mentality.
How many people work in your company?
We have sixteen people.
Do you have local agents inside the country?
We don't have agents. The market is very small
and 90 percent of the $40 mn comes from Baku not
from the other cities. That is why it is not creative
to have an agent to go to other cities.
|
V.I.P. INTERVIEWS
