BAKU, Azerbaijan, November 21. The Central Bank of Azerbaijan implements a long-term project to inform physical and legal entities about insurance, the Head of the Insurance Supervision Department of Azerbaijan's Central Bank, Vusal Gurbanov, said in an exclusive interview with Trend.
"The regulator in this area is working on implementing several projects. One of the projects involves informing the population and business entities about insurance services and their benefits. The primary goal is to evaluate the risks that the population and business entities might face, as well as the possibility of their insurance so that when an insured event occurs, they do not incur financial losses," said the department head.
"Our work in this direction is to inform the population as broadly as possible. I would like to mention that the Central Bank of Azerbaijan, the Compulsory Insurance Bureau, and Azerbaijan’s Insurers Association launched a joint project that involves all those components," he added.
He noted that before launching this project, a survey was conducted by the regulator among the group of physical and legal entities.
"This survey provided us with an initial assessment of insurance and risk awareness, as well as the direction of our future work in informing physical and business entities. Naturally, this project is going to be implemented gradually and on a long-term basis," said Gurbanov.
He said that property insurance in Azerbaijan can be both compulsory and voluntary.
"The compulsory property insurance of physical and business entities is mainly aimed at providing financial stability. Moreover, property insurance covers both residential and non-residential premises. In the event of damage, the owner may suffer losses. According to the results of organized population information on the insurance sector, activation in the field of compulsory property insurance is observed in the state. The regulator continues to work on improving the legal framework, as well as carrying out various reforms in this area," he said.
"To ensure the availability of this type of insurance, work is underway to digitalize and integrate the real estate databases of the Compulsory Insurance Bureau and other institutions. We are sure that, having realized those initiations, this type of insurance will gain popularity in the insurance sector," informed Gurbanov.
Since November 1, 2022, Azerbaijan has changed the rules for receiving insurance payments upon the occurrence of an insured event for vehicle owners with Motor Third Party Liability Insurance (MTPL).
"We made relevant changes regarding this type of insurance that entered into force on November 1. The bottom line of the new changes is that the insured person, in case of the insured event, should address his own insurance company instead of the insurance company of the side that caused him damage. Those changes are based on international practice, and before their implementation, we analyzed comprehensively the consequences of those in the market," he noted.
"Moreover, we published a complaints index on the website of the regulator in order to determine the criteria for the insurance company choice. This will allow us to determine the customer service quality of any insurance company on the relevant insurance and facilitate the population's insurance company selection process. In addition, it will create additional motivation for the insurance companies themselves to improve their customer service," he added.
Gurbanov said the regulator of Motor Third Party Liability Insurance developed new approaches, rules, and mechanisms for regulation and management.
"In order to improve the MTPL service quality, the regulator developed new rules and mechanisms of management that are based on the risks: the age and experience of the driver, the age of the vehicle, the number of persons allowed to drive the vehicle, and the territory where the vehicle is mainly located. Also, it should be noted that there is a discount bonus-malus system that allows estimating the MTPL policy based on the insurance history of the insured," he said.
Gurbanov noted that if the driver has no accident cases, then he will receive bonuses during the next insurance, and if there was an insured event, then he will receive malus.
"This system is working in real-time, which means that if there is any insured case that happens, the injured party will receive malus immediately. Moreover, in areas where traffic is dense, more stringent measures were applied under the malus system. All these works were carried out in order to minimize damage to third parties and ensure the safety of vehicles," he said.
In conclusion, Gurbanov said the CBA is currently carrying out reforms in the field of insurance sector development.
"Digitalization improves efficiency and transparency while also automating processes. In our opinion, the realization of those initiatives will increase the accessibility of insurance services. The other project that we carry out in the field of the insurance sector is the efficiency increase of the interactions between the insurance company and the insured. As you know, often disputable cases arise between the insured and the insurance company when the insured event happens. Our purpose is to reduce this problem to zero via this project," he said.
"Also we are working on eliminating the problems that occur during the evaluation of the damage caused. In this direction, we are working on improving the activities of independent experts. Also, relevant reforms are being carried out, including amendments to the legal framework. We pay great attention to strengthening the human resources of insurance companies. We arrange relevant meetings with international institutions and insurance companies as well as experts in this field for our local insurance companies," he concluded.
