Institutional development process under completion within agricultural insurance in Azerbaijan

Economy Materials 15 March 2020 14:09 (UTC +04:00)

BAKU, Azerbaijan, March 15

By Yusif Aghayev – Trend:

The process of institutional development, as well as the formation of a regulatory framework within the new mechanism of agricultural insurance is under completion in Azerbaijan, Chairman of the board of the Azerbaijan Agricultural Insurance Fund Fuad Sadikhov told Trend.

As is known, on August 19, 2019, Azerbaijani President Ilham Aliyev signed a decree on the application of the law on Agricultural Insurance and the creation of the Agricultural Insurance Fund, a non-profit legal entity that ensures the organization, development and sustainability of the agricultural insurance system in Azerbaijan, as well as the formation of a governance structure and controls its activity.

The Azerbaijani Cabinet of Ministers approved the Charter of the Agricultural Insurance Fund on December 14, 2019. The Charter includes the goals of the activity, obligations and rights of the Fund, the fundamentals of its management, authorized capital, property and financial activity, the procedure for compiling and submitting audit and accounting reports, as well as other issues.

“The necessary normative legal acts that will fully form the legislative framework allowing launching a new agricultural insurance mechanism are expected to be adopted soon,” Sadikhov added.

“First of all, the rules of agricultural insurance will be formed,” chairman said. “The relevant resolution of the Azerbaijani Cabinet of Ministers is expected to be adopted within these rules.”

“Then, relevant regulatory acts that regulate the foundations of activity, the procedure for certification and licensing of independent experts in the field of agricultural insurance, as well as the regulation on the information system of agricultural insurance and a number of other necessary documents will be adopted,” chairman said.

The formation of the Governing Body of the Fund, the main governing institutional structure, will be the next necessary step.

In this sphere, the Central Bank of the Republic of Azerbaijan is expected to adopt the relevant regulatory act, which will include the minimum requirements regarding the authorized capital. Afterwards, the shareholders of the insurance companies will sign the founders’ agreement.

The negotiations in this sphere are underway.

The new mechanism of agricultural insurance envisages the establishment of a management body, which will be established by insurance companies under the Agricultural Insurance Fund.

The implementation of the executive powers of the Fund, the insurance contracts, the organization of the preparation and support of its own electronic information system will be the main function of the management company.

The new agricultural insurance mechanism is expected to be applied from the second half of 2020.