Azerbaijan, Baku, April 19 / Trend A.Akhundov /
The compulsory insurance affects the market much more than it is reflected in the changes in the volume of the compulsory insurance fees, Head of the State Insurance Supervision Service under the Azerbaijani Finance Ministry Namig Khalilov said.
He said a new law "On compulsory types of insurance" which is discussed in the parliament in the third reading, can not and will not change the share of the compulsory insurance in the total insurance premiums.
"The compulsory insurance's impact is not limited to taxes on these types of the compulsory insurance. The compulsory insurance types create more contact between the insurance company and a potential customer and give it a chance to sell other products. It is easier to sell something to your existing client rather than to new customer," Khalilov said.
Therefore, he said, with the development of compulsory insurance, its share may fall due to the fact that it will increase the share of voluntary insurance.
Meanwhile, the Finance Ministry reported that annual revenues are expected to hit 50-60 million manat with the introduction of the compulsory insurance of immovable property.
This draft law regulates the four types of compulsory insurance - real estate, liability of owners of motor vehicles, passenger insurance, and liability insurance while exploiting the real estate.
Under the bill, regardless of the housing cost the insurance sum is set at 25,000 manat for Baku, and the release amount at 250 manat. The figures are 20,000 manat and 200 manat, respectively, for Sumgait, Ganja and Nakhchivan and 15,000 manat and 150 manat - for other regions.
The insurance fee for Baku's resident will hit 50 manat a year with insurance rate at 0.2 percent for this type of insurance. One who seeks a higher amount of insurance compensation has the opportunity to buy voluntary property insurance policy that will allow development of this insurance type.
Under the bill, the compulsory insurance of real estate will be distributed to all types of buildings, houses and apartments belonging to individuals, offices, legal entities, public property. In this case the insured event will be considered the facts related to damage to this property as a result of fire, explosion, lightning, short circuit in the electrical system, an accident in the sewer or water system, natural disasters, etc.
Compulsory insurance of civil liability associated with the exploitation of real estate provides insurance protection for third parties from harm caused by using this property. This kind of insurance will apply to legal and physical entities engaged in entrepreneurial activity. The rate of insurance coverage for this type of insurance for damage to health will hit 50,000 manat (per person, 5,000 manat), property - 50,000 manat.
Compulsory insurance for passengers will relate to people using the vehicles, regardless of its form. The amount of the insurance coverage will hit 5,000 manat per person. Until now, this type of insurance is regulated by the law adopted in 2003, but the acting form is unacceptable today and creates problems in obtaining compensation.
The bill provides for a differentiated approach while determining the insurance rate, depending on the vehicle. The rate of insurance coverage on property will amount to 5,000 manat (1,000 manat today) and 50,000 manat (5,000 manat today) for health. This activity is regulated by the law dated 1996.
Khalilov said the new bill also reflects other moments that make it more useful, more convenient for people.
"First, if the estimated payment amount is up to 1,000 manat, the insurance company will not require certificates from the traffic police. Second, this law lacks grounds, on which the insurance company may refuse to pay compensation. Even if the driver was drunk, even if he fled the scene, or he had no right to drive, the victim will still receive compensation," Khalilov said.
He said a bonus-malus system will be applied with the realization of the new law.
"A bonus-malus class or specific risk class will be assigned to a certain person depending on the availability of insurance claims or their lack. If you are insured every year and you do not have insurance cases, then your premium is reduced each year. Although conversely, insurance premium will increase when a large number of insurance claims recorded," Khalilov said.
The total premiums of all companies operating in the country amounted to 155.59 million manat, and payments amounted to 53.83 million manat in 2010.
The insurance premiums decreased by 4.73 percent (163.31 million manat) and payments grew by 1.43 percent (53.07 million manat).
Twenty seven insurance companies and one reinsurance company operated in Azerbaijan in the report period.
The total volume of the compulsory insurance premiums totaled 31.283 million manat (20.1 percent) and payments of 8.56 million manat (15.9 percent) in the report period.