Azerbaijan to release online property insurance


By Trend

The Central Bank of Azerbaijan implements a long-term
project to inform physical and legal entities about insurance, the
Head of the Insurance Supervision Department of Azerbaijan’s
Central Bank, Vusal Gurbanov, said in an exclusive interview with

“The regulator in this area is working on implementing
several projects. One of the projects involves informing the
population and business entities about insurance services and their
benefits. The primary goal is to evaluate the risks that the
population and business entities might face, as well as the
possibility of their insurance so that when an insured event
occurs, they do not incur financial losses,” said the department

“Our work in this direction is to inform the
population as broadly as possible. I would like to mention that the
Central Bank of Azerbaijan, the Compulsory Insurance Bureau, and
Azerbaijan’s Insurers Association launched a joint project that
involves all those components,” he added.

He noted that before launching this project, a survey
was conducted by the regulator among the group of physical and
legal entities.

“This survey provided us with an initial assessment of
insurance and risk awareness, as well as the direction of our
future work in informing physical and business entities. Naturally,
this project is going to be implemented gradually and on a
long-term basis,” said Gurbanov.

He said that property insurance in Azerbaijan can be
both compulsory and voluntary.

“The compulsory property insurance of physical and
business entities is mainly aimed at providing financial stability.
Moreover, property insurance covers both residential and
non-residential premises. In the event of damage, the owner may
suffer losses. According to the results of organized population
information on the insurance sector, activation in the field of
compulsory property insurance is observed in the state. The
regulator continues to work on improving the legal framework, as
well as carrying out various reforms in this area,” he said.

“To ensure the availability of this type of insurance,
work is underway to digitalize and integrate the real estate
databases of the Compulsory Insurance Bureau and other
institutions. We are sure that, having realized those initiations,
this type of insurance will gain popularity in the insurance
sector,” informed Gurbanov.

Since November 1, 2022, Azerbaijan has changed the
rules for receiving insurance payments upon the occurrence of an
insured event for vehicle owners with Motor Third Party Liability
Insurance (MTPL).

“We made relevant changes regarding this type of
insurance that entered into force on November 1. The bottom line of
the new changes is that the insured person, in case of the insured
event, should address his own insurance company instead of the
insurance company of the side that caused him damage. Those changes
are based on international practice, and before their
implementation, we analyzed comprehensively the consequences of
those in the market,” he noted.

“Moreover, we published a complaints index on the
website of the regulator in order to determine the criteria for the
insurance company choice. This will allow us to determine the
customer service quality of any insurance company on the relevant
insurance and facilitate the population’s insurance company
selection process. In addition, it will create additional
motivation for the insurance companies themselves to improve their
customer service,” he added.

Gurbanov said the regulator of Motor Third Party
Liability Insurance developed new approaches, rules, and mechanisms
for regulation and management.

“In order to improve the MTPL service quality, the
regulator developed new rules and mechanisms of management that are
based on the risks: the age and experience of the driver, the age
of the vehicle, the number of persons allowed to drive the vehicle,
and the territory where the vehicle is mainly located. Also, it
should be noted that there is a discount bonus-malus system that
allows estimating the MTPL policy based on the insurance history of
the insured,” he said.

Gurbanov noted that if the driver has no accident
cases, then he will receive bonuses during the next insurance, and
if there was an insured event, then he will receive malus.

“This system is working in real-time, which means that
if there is any insured case that happens, the injured party will
receive malus immediately. Moreover, in areas where traffic is
dense, more stringent measures were applied under the malus system.
All these works were carried out in order to minimize damage to
third parties and ensure the safety of vehicles,” he said.

In conclusion, Gurbanov said the CBA is currently
carrying out reforms in the field of insurance sector

“Digitalization improves efficiency and transparency
while also automating processes. In our opinion, the realization of
those initiatives will increase the accessibility of insurance
services. The other project that we carry out in the field of the
insurance sector is the efficiency increase of the interactions
between the insurance company and the insured. As you know, often
disputable cases arise between the insured and the insurance
company when the insured event happens. Our purpose is to reduce
this problem to zero via this project,” he said.

“Also we are working on eliminating the problems that
occur during the evaluation of the damage caused. In this
direction, we are working on improving the activities of
independent experts. Also, relevant reforms are being carried out,
including amendments to the legal framework. We pay great attention
to strengthening the human resources of insurance companies. We
arrange relevant meetings with international institutions and
insurance companies as well as experts in this field for our local
insurance companies,” he concluded.

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