Shusha: Launchpad for insurance cooperation among Turkic States Caliber.Az review

In recent years, Azerbaijan’s insurance market has demonstrated remarkable growth: the domestic market has doubled in size, with company premiums reaching 11% of GDP last year. The sector’s development is closely linked to the capacity of the domestic financial market and its penetration relative to GDP.

Regional cooperation offers significant opportunities to develop new insurance and reinsurance products and to expand their reach across a shared market. A major step in this direction was recently taken by the Organisation of Turkic States (OTS). The first Assembly of the OTS Insurance Union was held in Shusha, resulting in agreements to co-opt new members, exchange expertise, and jointly develop innovative insurance products.

In recent years, Azerbaijan and its partners within the OTS have been working to deepen financial-sector integration and expand regional access to preferential financing. Some progress has already been made: in May last year, the Turkic Investment Fund (TIF) was established to provide technical and capital support for projects across Turkic-speaking countries, and plans are underway to create a Turkic Development Bank in the near future.

The latest step in coordinating the financial market came with the first Assembly of the Turkic World Insurance Union, held on September 14 in Shusha. The forum featured two panel discussions — “Regulatory Approaches in the Turkic World Insurance Industry” and “Turkic World Insurance Union: Goals and Prospects Ahead.” For the first time, insurers from across the Turkic world convened on a single platform: representatives of financial regulators and insurance associations from Azerbaijan, Kazakhstan, Kyrgyzstan, Türkiye, Uzbekistan, and the Turkish Republic of Northern Cyprus participated in the assembly.

“The Assembly is an important platform for developing the insurance sector of the Turkic world, strengthening mutual cooperation, and exchanging expertise. The innovative products and modern approaches proposed during these exchanges will help enrich the insurance market, foster more flexible and resilient solutions, and make a significant contribution to the sector’s modernisation,” noted Vusal Masiyev, Executive Director of the Compulsory Insurance Bureau of Azerbaijan, during the forum.

At the conclusion of the forum, participants signed a joint “Proclamation Document,” under which the Insurance Union (originally established on 24 May 2022) was reorganised to align with the goals and principles of the OTS. In addition to the five founding members, insurance associations from Hungary, Turkmenistan, and the Turkish Republic of Northern Cyprus joined the Union as observer organisations.

These steps aim to foster the mutual exchange of expertise, personnel, and information among the insurance markets of member and observer countries, systematically develop reinsurance relationships, and promote sustainable and stable growth across the insurance sectors of the Organisation’s nations.

Judging by the statements of participants at the Shusha forum, there are strong grounds to expect an improvement in the performance of the insurance markets of Turkic countries in the medium term. “The average annual growth rate (Compound Annual Growth Rate — CAGR) of the insurance markets of OTS member and observer countries is expected to reach 44–51% by 2030,” noted Elmar Mirsalayev, Executive Director of the Azerbaijan Insurers Association (ASA), during the forum. “Last year, the insurance markets of OTS countries showed significant growth: Azerbaijan — 10.7%, Kazakhstan — 41.38%, Kyrgyzstan — 71.32%, Türkiye — 72.5%, Uzbekistan — 21.22%.”

Mirsalayev emphasised that this observed growth, along with the developing institutional mechanisms, will accelerate the integration of the insurance markets of Turkic states and further strengthen cooperation.

A framework for exchanging expertise has been established among the insurance markets of OTS countries, and reinsurance relationships are being systematically developed. In this context, coordination and joint monitoring of potential risks are increasingly in demand.

“The rise in natural disasters, driven by the negative impacts of climate change, is adversely affecting the reinsurance market — prices fluctuate, volumes decrease, and this compels countries to seek alternative products and markets,” said Davut Menteş, Chairman of Türkiye’s Insurance and Private Pension Regulation and Supervision Agency.

Türkiye is also ready to share its extensive experience in agricultural insurance with other Turkic states, including Azerbaijan. Accordingly, Azerbaijan and Türkiye are set to exchange expertise and establish cooperation in earthquake insurance. Vusal Gurbanov, Director General of the Central Bank of Azerbaijan (CBA), explained: “To create an earthquake insurance mechanism, seismic maps and risk models are essential. Based on the model already applied in Türkiye, a tailored version for Azerbaijan has been developed and is currently being tested. This will allow for the assessment of economic and material risks from potential earthquakes, both for the state and for insurance companies.”

During the Assembly in Shusha, agreements were reached between the relevant associations and state institutions of Azerbaijan, Uzbekistan, and Kyrgyzstan to expand cooperation within a unified data system, including the exchange of information, expertise, and technical collaboration in the insurance sector. The agreements also envisage aligning insurance assessment rules across OTS countries with common principles.

Integration processes and the exchange of experience within the OTS framework are undoubtedly a sought-after trend for the Azerbaijani insurance market. Among the key priorities of the Central Bank of Azerbaijan’s (CBA) “Financial Sector Development Strategy for 2024–2026” are the implementation of advanced international standards, digitalisation and other IT innovations, as well as the strengthening of the regulatory framework.

Recently, the Azerbaijani insurance sector has seen noticeable improvements in prudential indicators in line with Solvency II standards, stronger reinsurance coverage, development of the insurance intermediary sector, enhancement of agricultural insurance systems, and increased reserving. These measures, combined with prospective cooperation with the insurance markets of OTS countries, are expected to help minimise risks from potential force majeure events in the future.

Sectoral reforms are ongoing, and according to CBA Director General Vusal Gurbanov, risk-oriented regulation and risk-based supervision have been prioritised as key tools for enhancing resilience in Azerbaijan’s insurance sector. The international standard for transparent financial reporting, IFRS 17, is also being actively implemented. “The financial stability of the sector largely depends on the corporate environment of insurers, the adoption of corporate governance standards, and ensuring transparent communication,” emphasised Gurbanov.

These reforms have already produced tangible results. In 2024, the Azerbaijani insurance market grew by 11%, with total premiums exceeding 1.353 billion manats (approximately $796 million). The combined revenue of 16 insurance companies surpassed 1.362 billion manats ($801 million), up 21.9% from the previous year. The sector’s positive momentum continued into January–July 2025: domestic insurers collected 937.658 million manats (around $551 million) in premiums, marking a 12.5% increase over the same period in 2024.

“The ongoing reforms in the insurance sector have had a positive impact on its development and resilience. In the first half of 2025, the total capital of Azerbaijan’s insurance sector was nearly twice the level of risk capital, and sector assets grew by 12% over the past year, exceeding 2.1 billion manats (approximately $1.24 billion),” stated CBA Deputy Chairman Aliyar Mammadyarov during the forum in Shusha. “Profitability indicators also showed growth: in the first half of this year, the sector’s total profit exceeded 80 million manats (around $47 million), with a return on assets (ROA) of 7% and a return on equity (ROE) of 25%.”