Azerbaijan tightens supervision over compulsory real estate insurance
By Narmina Mammadova
The market for compulsory insurance of real estate may double in Azerbaijan in 2019, the chairman of the board of the Azerbaijan Insurers Association (AIA), Mustafa Abbasbayli, said on December 12.
The head of the Association said that the penetration of compulsory real estate insurance in Azerbaijan is 10-15 percent. Measures are being taken to increase the premiums on this type of insurance.
"In particular, the plans include establishing cooperation with the State Real Estate Register Service, in order to identify which objects are not insured," said Abbasbayli.
Also, the head of the AIA added that the main task of the compulsory type of insurance is the development of this type of insurance among individuals, since almost all objects belonging to legal entities are insured.
"The penalty for non-compliance with the rules on compulsory real estate insurance is less than that of cars. The code of administrative offenses provides for a penalty for evading property insurance, but an appropriate regulatory mechanism has not yet been created. For all these questions, some proposals have already been sent to the Chamber of Financial Supervision markets. Active work is underway in this direction," said Abbasbayli.
Fees for compulsory real estate insurance in Azerbaijan for January-October 2018 amounted to 25,299 million manats, which is 17.97 percent more compared to the same period last year and accounts for 4.1 percent of all fees. At the same time, payments amounted to 3,284 million manats, which is 36.55 percent more compared to the same period last year and accounts for 1.59 percent of all payments.
At present, 13 insurance companies are members of the Compulsory Insurance Bureau (Ateshgah Insurance, Standard Insurance, AtaInsurance, Xalq Insurance, PASHA Insurance, AXA MBASK, AzInsurance, State Insurance Commercial Company AzerInsurance, Meqa Insurance, Silkway Insurance, Azerbaijan Senaye Insurance, Qala Insurance, Gunay Insurance).
Compulsory real estate insurance covers all types of buildings, residential buildings, apartments owned by individuals and legal entities, as well as state property. In this case, the facts related to damage to this property as a result of fire, explosion, short circuit in the power grid, an accident in the sewer or water supply system, natural disasters, etc. are considered the insured event.
The tariff for this type of insurance is 0.2 percent of the sum insured.
The maximum amount of insurance coverage for real estate in Baku is 25,000 manats, 20,000 manats - in Ganja, Sumgayit and Nakhchivan, in other settlements - 15,000 manats. The cost of insurance, respectively, is 50, 40 and 30 manats.
AIA was established in December 2006 through the merger of two insurance organizations - the Association of Insurers of Azerbaijan and the Union of Insurance Companies of Azerbaijan. The main purpose of the association is to ensure the development of the insurance market in Azerbaijan, as well as joint discussion of the problems and prospects of the market.
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