Situation with mandatory real estate insurance - unsatisfactory in Azerbaijan

Finance Materials 4 October 2019 10:04 (UTC +04:00)

Baku, Azerbaijan, Oct. 4

By Kamala Mammadli – Trend:

The situation in the field of mandatory real estate insurance is unsatisfactory in Azerbaijan, Khayal Mammadkhanli, insurance expert, chairman of the insurance intermediaries committee of the Azerbaijan Insurers Association, told Trend.

“The mandatory types of insurance are regulated by law and fines are envisaged for not concluding a contract, as well as mandatory real estate insurance is intended for both individuals and legal entities,” he said.

"However, in reality the situation is different," Mammadkhanli added. “The legal entities’ real estate is insured insufficiently, sometimes insurance is formal.”

"However, this is under the control of the Ministry of Emergency Situations and therefore, most facilities have insurance policies," he said.

“The situation with mandatory insurance of property of individuals is worse,” Mammadkhanli said. “Such situation is observed in Baku and the Absheron peninsula.”

“Most of the property is not insured,” he added. “In most cases, property formalized by a notary (purchase, sale, donation, etc.) is insured. The owners (individuals) of apartments and private houses were provided with insurance policies.”

“The mandatory real estate insurance of individuals is under the control of the local executive bodies,” Mammadkhanli added.

"Local executive bodies do not cope with this task,” he added. “In general, they are not interested in this issue."

“The number of applications for property insurance was expected to be increased in connection with big fire that occurred in Baku,” Mammadkhanli said. “However, the statistics for three quarters of the year testifies to the fact that insurance has declined compared to last year.”

"Presently, work is underway both in the Compulsory Insurance Bureau and the Financial Market Supervisory Authority of Azerbaijan (FIMSA) to establish a mechanism for applying this type of insurance," Mammadkhanli said.

“The volume of voluntary real estate insurance has also reduced,” he said. “Citizens think that if one purchases a policy on mandatory real estate insurance, then there is no need in voluntary real estate insurance.”

"But they do not take into account the fact that the mandatory policy envisages insurance for the real estate itself, that is, this type of insurance does not include the situation and other property that is inside the house. For this purpose, it is necessary to purchase a policy for voluntary real estate insurance."

In January-August 2019, mandatory insurance fees amounted to 25.382 million manats, payments - 3.497 million manats.

(1 USD = 1.7 AZN on Oct. 4)


Follow the author on Twitter: @kamala_mammadli