Azerbaijani MP: Compulsory insurance against accidents will not cover able-bodied population

Azerbaijan, Baku, May 8 / Trend U.Ismayilova /

A law on compulsory insurance on labor ability loss in production that is under discussion in the parliament will not cover the entire able-bodied population, Member of the Parliamentary Standing Committee on Economic Policy Vahid Ahmadov said.

"Not all employers have entered into employment agreement with its employees in Azerbaijan, respectively, the law would apply only if they," Ahmadov added.

The lack of labor contracts, which seeks to evade tax payments, as well as fix the exact amount of the employee's salary, is an important problem for the country's labor market, he added.

Therefore, the new law will cover 1.68 million people officially registered in the State Social Protection Fund, despite the fact that in reality this figure is much higher Ahmadov said.

"Despite this, the use of compulsory insurance in respect of 1.5-2 million population of Azerbaijan in the first stage is an important step, and further legislation will be improved for distribution to all able-bodied persons in the country," he added.

The new law will give an additional impetus to the development of insurance market in the country, which has serious problems with the mechanism of insurance payments, he added.

"The insurance market of Azerbaijan is young yet, of course, there are certain problems in it, and the introduction of a new compulsory form of insurance, regulated by the state, will give an additional impetus for its development," Ahmadov noted.

Executive Director of the Azerbaijani Realtors Association Elnur Azadova, possibly new compulsory form of insurance will result in a slight increase in the cost of housing.

"The rise in prices will naturally be due to increased costs, but the exact amount of growth depends on the level of insurance rate to be determined on the basis of the approved law," Azadov added.

According to him, in addition to price increases in the construction sector, the country will experience increased professional quality, as construction companies and workers themselves will have to adhere to technical safety standard to reduce the risk of an accident.

"As a result of compliance with all requirements of the construction market, the number of accidents will seriously fall," Azadov said.

Parliament plans to consider the bill in the third reading, according to which the insurer must be licensed to provide life insurance services and insurance services in the case of incapacity as a result of occupational diseases and industrial accidents.

The law will also be applied to prisoners attracted to employment, students and pupils who are undergoing internships, military personnel assigned to enterprises, individuals engaged in self-employment and employees working for emergency services. The bill will also apply to foreigners and persons without Azerbaijani citizenship.

The policyholder will have the right to choose their insurer, but may not refuse to conclude the agreement on compulsory insurance, except in cases specified by the law. The agreement on compulsory insurance against accidents will run for an indefinite period.

The maximum insurance rate is two percent of the salary fund. Tariffs will be differentiated according to various sectors. Presumably, all spheres of economic activity will be divided into three or four groups depending on the degree of risk. According to the project, insurance rates for individual sectors will be reviewed by the relevant executive authority annually. In addition, tariffs for the next year must be approved before this Dec. 1.

The Labor and Social Protection Ministry's Labor Inspectorate reported that about 250 accidents occurred in production in 2009 - 65 in the construction sector.

There are 28 insurance and one reinsurance company in Azerbaijan.

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