Azerbaijan eyes to strengthen compulsory real estate insurance oversight

Business Materials 6 March 2018 18:38 (UTC +04:00)

Baku, Azerbaijan, March 6

By Anvar Mammadov - Trend:

Azerbaijan intends to strengthen compulsory real estate insurance oversight, Mustafa Abbasbayli, head of the Azerbaijan Insurers Association (AIA), told Trend March 6.

He said that the AIA is analyzing the possibility of creating new tools to control the implementation of this type of insurance.

“Presently, there are several compulsory types of insurance in Azerbaijan, and their implementation is insignificant in the market,” he noted. “This especially concerns compulsory real estate insurance. The share of the market’s coverage by this type of insurance is only 10-15 percent, whereas the insurance value of the real estate market is roughly 200-300 million manats. The reason is that there is currently no effective oversight over the conclusion of contracts on compulsory insurance. We plan to create and implement new oversight tools to increase the market’s coverage by the compulsory types of insurance.”

He added that there are plans to turn a number of voluntary types of insurance into mandatory ones.

“This step is one of the opportunities for the development of voluntary types of insurance,” Abbasbayli said. “We plan to transfer several types of insurance from the voluntary category to the mandatory category. After sufficient development of these types of insurance, they can be returned back to the voluntary category.”

According to the data of Azerbaijan’s Financial Markets Supervision Chamber, fees on compulsory real estate insurance amounted to 27.93 million manats in 2017, with premiums totaling 2.83 million manats.

Currently, 13 insurance companies operate in the country in the field of compulsory insurance of real estate (OJSC Ateshgah Insurance, OJSC Standard Insurance, OJSC AtaInsurance, OJSC Xalq Insurance, OJSC PASHA Insurance, OJSC AXA MBASK, OJSC AzInsurance, State Insurance commercial company AzerInsurance, OJSC Meqa Insurance, OJSC Silkway Insurance, OJSC Azerbaijan Senaye Insurance, OJSC Qala Insurance, OJSC Gunay Insurance).

Compulsory real estate insurance covers all types of buildings including apartments, houses belonging to natural and legal entities and state property. Damage done to the property by a fire, an explosion, a short-circuit in electricity network, crash of sewerage or water supply systems, natural disasters etc. is considered an insurance case.

Tariff on this variety of insurance is 0.2 percent of insurance amount.

Maximum real estate insurance amount in Baku is 25,000 manats, in Ganja, Sumgayit and Nakhchivan – 20,000 manats, in other settlements – 15,000 manats. The price of the insurance is 50, 40 and 30 manats correspondingly.

The Compulsory Insurance Bureau of Azerbaijan (ISB) includes 16 companies, 13 of which are authorized to sell policies of compulsory insurance of real estate.

(1.7001 manats = 1$ on March 6)