AIA: Compulsory insurance in Azerbaijan increases public confidence in insurance
Azerbaijan, Baku, May 20 / Trend A.Akhundov /
The introduction of compulsory insurance increases public confidence in the insurance, Executive Director of the Azerbaijani Insurers' Association Azer Aliyev said.
"The compulsory insurance types have two main objectives: to provide social security in general, and to attract people to the insurance process. If a man had not thought about insurance in general, now he knows that he is insured under compulsory insurance type, and he will receive compensation in case of incident in work," Aliyev said.
After the person receives compensation under an insurance case, he will be confidence in insurance. "Over time, the number of such people will grow," Aliyev said.
Azerbaijani President Ilham Aliyev approved the law on compulsory insurance on labor ability loss in July 2010.
The Azerbaijani parliament discussed the bill on compulsory types of insurance in the third reading.
Aliyev said the increase in premiums on compulsory insurance does not mean that its share in the total portfolio will increase, because voluntary insurance will be tightened then.
"Of course, in the early days following the adoption of the new law, the compulsory insurance would occupy a major share of the portfolio. But after a while, it is difficult to call the exact time, the share of the voluntary insurance will exceed the compulsory obey," Aliyev said.
He cited as an example the introduction of compulsory insurance of employees in the workplace, due to which about 90 percent of premiums on life insurance fell to the compulsory forms.
"But, this percentage will decrease in the future," Aliyev said.
Total premiums of all companies operating in the country amounted to 155.59 million manat and payments 53.83 million manat in 210.
The amount of premiums for compulsory insurance for the period totaled 31.283 million manat (20.1 percent) for payments of 8.56 million manat (15.9 percent).
The Azerbaijani insurance companies' premiums on life insurance hit about 10 million manat (on compulsory insurance on labor ability loss in production hit 8.7 million manat and voluntary life insurance - 1.15 million manat) in January-April 2011. The figure was only 1.457 million manat in 2010.
This draft law regulates the four types of compulsory insurance - real estate, liability of owners of motor vehicles, passenger insurance, and liability insurance while exploiting the real estate.
Under the bill, regardless of the housing cost the insurance sum is set at 25,000 manat for Baku, and the release amount at 250 manat. The figures are 20,000 manat and 200 manat, respectively, for Sumgait, Ganja and Nakhchivan and 15,000 manat and 150 manat - for other regions.
The insurance fee for Baku's resident will hit 50 manat a year with insurance rate at 0.2 percent for this type of insurance. One who seeks a higher amount of insurance compensation has the opportunity to buy voluntary property insurance policy that will allow development of this insurance type.
Under the bill, the compulsory insurance of real estate will be distributed to all types of buildings, houses and apartments belonging to individuals, offices, legal entities, public property. In this case the insured event will be considered the facts related to damage to this property as a result of fire, explosion, lightning, short circuit in the electrical system, an accident in the sewer or water system, natural disasters, etc.
Compulsory insurance of civil liability associated with the exploitation of real estate provides insurance protection for third parties from harm caused by using this property. This kind of insurance will apply to legal and physical entities engaged in entrepreneurial activity. The rate of insurance coverage for this type of insurance for damage to health will hit 50,000 manat (per person, 5,000 manat), property - 50,000 manat.
Compulsory insurance for passengers will relate to people using the vehicles, regardless of its form. The amount of the insurance coverage will hit 5,000 manat per person. Until now, this type of insurance is regulated by the law adopted in 2003, but the acting form is unacceptable today and creates problems in obtaining compensation.
The bill provides for a differentiated approach while determining the insurance rate, depending on the vehicle. The rate of insurance coverage on property will amount to 5,000 manat (1,000 manat today) and 50,000 manat (5,000 manat today) for health. This activity is regulated by the law dated 1996.
Twenty seven insurance companies and one reinsurance company operated in Azerbaijan in the report period.