Azerbaijan to increase tariffs on compulsory motor insurance by 9 times

Azerbaijan, Baku, September 18 / Trend I. Khalilova /

The Azerbaijan Ministry of Finance plans to increase tariffs for compulsory motor insurance by 10 times, the Ministry of Finance State Insurance Supervision Service head Namik Khalilov said.

"We plan to include the base rate and certain factors associated with an engine for passenger cars, seats in buses, carrying capacity for trucks, Khalilov said. Ratios will be applied to the basic rate.

The insurance fee for motor vehicles in the country is 10 manat. Insurance coverage on compulsory motor insurance  is 6,000 manat, including 1,000 manat for damage to property, and 5,000 manat - a health hazard.

The coefficients on compulsory motor insurance will be determined under the new regulation. It will be developed after the new law "Compulsory types of insurance" entered into force, the State Insurance Service head said. The law will set a limit of liability on compulsory motor insurance. It will be increased from the current 6,000 to 55,000 manat, of which 5,000 manat is provided for damage to property, and 50,000 manat - a health hazard.

"A ninefold increase is very important, but there is a need. Today we observe different kinds of cars in the country, while even the slightest damage leads to large expenditure, Khalilov said.  So, the limit of liability worth 1,000 manat is a very small sum, although the new rate at 5,000 manat can not be considered very high.  

This figure [property damage] can reach up to 500,000 euros in western countries.

An interesting point is also that the increase in the limit of coverage on compulsory motor insurance will increase the tariffs. So, this process in all countries is conducted stage-by-stage.

"Azerbaijan also expects to gradually increase the limit. It will be set at 5,000 manat at the first stage. It will mean a significant approximation to the real costs, Khalilov said. The limit of insurance coverage for damage to human life and health has not been fixed in European countries. These costs can reach even up to one million euros and more.

Diversification in the tariff schedule on compulsory motor insurance is inevitable. It is wrong to carry out insurance fees by owners of Zaporozec and Hummer. According to the new rules, payment will be made depending on the volume of a car engine, that is, for example, 30 manat and 150-200 manat, respectively, Khalilov said.

Today the tariffs on compulsory motor insurance vary in the range from $90-200 in Russia. The base rate is $80. Different rates have been fixed depending on the conditions and place of exploitation of the vehicle, expiration date, the person who uses it.

On September 18, the official exchange rate is 0.8033 manat to $1.