Compulsory insurance to be toughened
By Nigar Orujova
Those avoiding to conclude compulsory insurance agreement will be fined starting from next May.
This offer is envisaged in the draft amendments to the Administrative Offences Code, which is submitted for consideration by the Azerbaijani Parliament.
Compulsory insurance presupposes protection of the general public, legal persons or the state as a whole against the risks.
There are four types of compulsory insurance in Azerbaijan including compulsory insurance of real property, compulsory third party liability insurance of motor vehicles, compulsory third party liability insurance associated with the use of the real property, and compulsory insurance of passengers against accidents.
Furthermore, Azerbaijan plans to launch a pilot project for the introduction of mandatory health insurance by 2017.
The activities related to compulsory insurance are regulated by the law ‘On compulsory types of insurance’ and require insurance companies to pass licensing.
In Azerbaijan, there are 12 insurance companies that have licenses for the provision of compulsory insurance of real estate, 11 companies on compulsory insurance of civil liability in the operation of real estate, and 1 company on insurance of passengers.
Currently, the lack of compulsory insurance contract on the part of individuals and legal entities that are responsible for compulsory insurance against the relevant risks is punished by a fine for individuals in the amount of 10 manats ($9.5), for officials – in the amount from 60 to 80 manats (from $57 to $76) and for legal entities - from 150 to 200 manats (from $143 to $190).
The draft amendments presuppose that for the lack of agreement on compulsory insurance, except for the agreement on compulsory insurance against accidents at work and the agreement on compulsory insurance of civil liability of owners of vehicles, individuals will be fined in the amount of 30 manats ($29), officials - 80 manats ($76) and legal persons - 200 manats ($190).
In case of absence of agreement on compulsory insurance against accidents at work, individuals will be required to pay a fine of 500 manats ($476), officials will pay 1,500 manats ($1,429), and legal persons will have to pay 5,000 manats ($4,762).
The lack of contract of compulsory insurance of civil liability of vehicle owners will be fined in the amount of 50 manats ($48) for individuals, officials will pay 100 manats ($95), and legal entities – 300 manats ($286).
The role and importance of insurance is versatile, playing a leading part in ensuring the continued operation of managing subjects and normal operation of entrepreneurs.
Considering the fact that insurance exempt part of temporary free funds of legal entities and citizens from cash money circulation, insurance has also a certain value to control the circulation of money and currency appreciation.
However, the main role of insurance is to form an insurance fund to cover unexpected expenses.