Azerbaijan to increase penalties for non-conclusion of compulsory insurance contracts

Azerbaijan to increase penalties for non-conclusion of compulsory insurance contracts

Azerbaijan, Baku, July 29 / Trend I. Khalilova /

Azerbaijan plans to increase the amount of penalties for non-conclusion of insurance contracts for the compulsory insurance against disability resulting from occupational diseases and industrial accidents, deputy head of the State Labour Inspection Service at the Ministry of Labour and Social Welfare Maharram Maharov said.

"The proposals have been sent to the Azerbaijani Parliament of the country," he said.

The enterprises may be fined from 150 to 200 manat for non-conclusion of the contract for the compulsory insurance at work in accordance with the Code of Administrative Offences (Article 253.1).

"The service has not imposed penalties yet," he said.

A company official may be subject to a fine worth 1,000-2,000 manat in accordance with the same Code (Article 318.1) in case of non-fulfilling the instructions.

According to the law, all enterprises and organizations, regardless of the legal form and ownership, physical entities, engaged in entrepreneurial activity without a legal entity must insure their employees against occupational diseases and accidents on the basis of an employment contract or a civil contract.

"The service does not have information about employers who have shied away from insuring their employees," he said.

At present, about 500,000 people have been insured on compulsory insurance against disability, resulting from occupational diseases and accidents at work in Azerbaijan.
The use of the labor insurance service began in December 2010 with about 14,000 enterprises insuring workers.

At present, the share of compulsory life insurance has reached 90 percent.

According to official statistics, as of June 1 there have been 1.362 million hired employees and about 400,000 registered private people dealing with entrepreneurship.

There are three life insurance companies that are licensed to provide services of this kind in Azerbaijan - Atesgah Heyat, Qala Heyat and Pasa Həyat.

Only Atesgah Heyat insured more than 200,000 employees. More than 6,000 contracts were concluded in the first half of the year.

About 160,000 people have become Pasa Heyat company's clients.

The contracts were signed with about 300 legal entities on obligatory accidental insurance.
About 7,500 business entities became clients of Qala Həyat.

According to the State Insurance Supervision Service under the Azerbaijani Ministry of Finance, Pasa Heyat collected premiums amounting to 6.218 million manat in the first half of the year, taking 43 percent of the life insurance market and 6.33 percent of the total insurance market in the country. Atesgah Heyat Company collected 4.613 million manat. About 31.9 and 4.69 percent fall to the company. Qala Heyat collected 3.542 million manat. About 24.5 and 3.6 percent fall to this company.

About 0.6 percent of the life insurance market (worth about 85,000 manat) is given to portfolios of life-insurance companies which provide similar services before a three-year moratorium expires in late March this year. The company indicates that only specialized companies deal with life insurance.

The total amount of premiums for voluntary life insurance amounted to 1.52 million manat. The Azerbaijani insurance companies' premium for compulsory insurance and disability, resulting from occupational diseases and accidents at work, was 12.938 million manat in the first half of 2011.

The potential market for compulsory insurance is estimated at about 30 million manat. The existing three companies have covered almost half of the market in six months.
However, there was a sharp slowdown in fees for compulsory insurance against accidents in June.

June fees exceeded that of January-May by 8.35 percent, while fees in May increased by 37.12 percent compared to January-April. In April fees rose by 46.13 percent compared to January-March. In March the figure exceeded threefold compared to January and February.

The chairman of the insurance company Qarant Sıgorta Vagif Hasanov said that the peak level of fees of Azerbaijani life insurance companies for compulsory insurance fell behind.

"First, insurance companies began insuring employees in large companies", Hasanov said. "At present, small companies are dealing with this."

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