Real estate compulsory insurance annual revenues in Azerbaijan estimated at 50 million manat
Azerbaijan, Baku, April 8 (Trend, I. Khalilova)
As the real estate compulsory insurance has been introduced in Azerbaijan, annual revenues are calculated at up to AZN 50 million, Ziyad Samedzadeh, Chairman of the Parliament's Committee on Economic Policy reported on Friday. He was speaking at the sidelines of the second reading of the bill "On Compulsory Kinds of Insurance".
"This is not too large sum, which makes up AZN 5-6 per capita. The launch of the real estate compulsory insurance will allow to increase insurance premiums up to AZN 25 per capita in Azerbaijan", Samedzadeh said.
According to the latest edition of the bill, it is decided to introduce the fixed sum of insurance of AZN 25,000 for Baku, with disposal sum of AZN 250, regardless from real estate's value. For the cities of Sumgayit, Ganja an Nakhchivan, the insurance sum is AZN 20,000, with disposal sum of AZN 200, and for the rest regions, it is equivalent to AZN 15,000 (AZN 150).
Under the previous option of the bill, insurance sum for the real estate insurance had to be calculated according to real estate restoration-related costs.
"In accordance with amendments, under the insurance tariff of 0.2 percent on this kind of insurance, insurance sum to be paid by resident of the capital will make up AZN 50 a year while those hoping for a higher insurance compensation can also acquire a real estate voluntary insurance policy to help develop this direction of insurance as well. The United States, Germany and Norway, which have already passed all these stages, have reached a level, under which the insurance market is the second biggest source of investments", said Samedzadeh.
According to him, the procedure of real estate insurance respecting the interests of pensioners, families of martyrs and other poor layers of population is being examined jointly with the executive power, according to him.
In addition, Samedzadeh has asked the Ministry of Finance to tighten control of insurance companies and provide transparency of their operation.
"Two years ago, the profit of insurance companies spent for capitalization purposes was freed from taxation, an important measure at the time. However, as the new law takes effect new rules of the game will emerge", he said.
In the course of discussions, a series of MPs suggested, following the enactment of the law, issuing permissions for real estate compulsory insurance to companies having more than 10-year experience of work with property voluntary insurance, and appropriate logistics and resources.
Under the bill, real estate compulsory insurance will cover all kinds of constructions, living buildings, physical persons-owned living apartments, offices of legal entities, and state property.
Insurance case will be facts related to aforesaid property's damage as a result of fire, explosion, thunderstorm, short circuit, sanitation or water pipeline system accident, natural cataclysms, etc.
Currently, ten kinds of compulsory insurance are applied in Azerbaijan. However, the combined collection of compulsory insurance premiums is equivalent to only 20 percent of the insurance market's premiums, which is a low indicator showing the necessity of improvement of legal provisions in the field of compulsory insurance.
The official rate is 0.7923 manat to $1 on April 8.