One of the main tasks and functions of the Azerbaijani Compulsory Insurance Bureau is to ensure stability in the compulsory insurance market, Executive Director of the Compulsory Insurance Bureau Rashad Ahmadov said in an interview with Trend.
Among the main tasks and functions are also the protection of the interests of the insured people and third parties who have suffered damage and ensuring of the payment of compensations within the compulsory types of insurance during the cases established upon the law.
“A meeting under the chairmanship of Prime Minister Ali Asadov was held in the Cabinet of Ministers on January 24, 2020,” Ahmadov added. “The issues of the implementation of the tasks set by the Azerbaijani president in connection with the use of compulsory insurance in the country were discussed at the meeting.”
“Large-scale activity has been carried out in this sphere over the past few years,” executive director added. “First of all, it is necessary to stress the digitalization of two of five mandatory types of insurance.”
The Compulsory Insurance Bureau introduced new software for formalizing and registration of insurance contracts on compulsory liability insurance of vehicle owners in March 2020.
“This platform has been implemented taking into account the changing conditions in the compulsory insurance market and will allow taking into account all client data more efficiently, including information related to the use of raising and lowering coefficients (bonus - malus), the accident-free driving, carry out paperwork in e-format more rapidly,” Ahmadov added.
“As a result of the introduction of the abovementioned innovations, we were able to achieve penetration within this type of insurance by almost 100 percent,” Ahmadov said. “An increase in the number of insurance certificates allows maintaining loss ratio at a very satisfactory level.”
“As of 2019, the loss ratio on this type of insurance amounted to approximately 67 percent, which is a fairly good indicator, taking into account the European insurance practice,” executive director added.
“In general, the profitability of compulsory types of insurance cannot be high as the activity being carried out within these types of insurance are primarily a tool to ensure social guarantees for people affected as a result of the incidents which were insured," said Ahmadov.
Touching upon the issue of revising insurance tariffs as part of compulsory liability insurance of motor vehicle owners, Ahmadov stressed that he does not stand for this and thinks that tariffs may be revised only if there is an adequate change in the insurance amounts.
“Digitalization of compulsory real estate insurance is expected to be observed in Azerbaijan,” executive director said. “The process of transferring all processes related to the mandatory property insurance into e-format was tested at the beginning of this year within the working group together with the relevant structures. This was carried out amid the fulfillment of the Azerbaijani president’s instructions on digitalization of the country's economy.”
“It will be possible to carry out this procedure after the implementation of the relevant data on real estate in the e-system of the Compulsory Insurance Bureau,” executive director said. “For this purpose, it is necessary to change the law "On Compulsory Types of Insurance".”
"The potential of the compulsory real estate insurance segment is quite big and the growth prospects are considerable,” Ahmadov added. “In general, according to our estimates, the total potential of the compulsory real estate insurance market in Azerbaijan is approximately 200-250 million manat ($117-147 million).”
“While stressing the growth dynamics on this type of insurance, I can say that 200,848 contracts were concluded from January through April 2020, which is 5.3 times more than in the same period of 2019 while the amount of the collected insurance premiums amounted to 20.2 million manat ($11.9 million), which demonstrates an increase by more than 66 percent,” Ahmadov said.
Presently, there are 15 insurance companies having the licenses to carry out compulsory types of insurance, four of which are involved in the field of life insurance, eleven - in the field of non-life insurance.
Some 21 insurance companies and one reinsurance company operate in Azerbaijan.
Follow us on Twitter @AzerNewsAz