AZERBAIJAN: temporary administration institution established in insurance

The presidential decree of Ilham ALIYEV on amending the Law on insurance activity provides for the right of the Financial Market Supervisory Authority of Azerbaijan to introduce temporary administrators in Azeri insurance companies or dismiss their top management from duty, as the news agency Trend wrote.

Cases of introduction of temporary administration, dismissal of top management and development of a recovery plan may include: reduction of the total capital of a company to a level below the minimal requirements; failure of an insurance company to fulfil its obligations to customers, the Compulsory insurance bureau, the regulator or other parties during a period of 3 months.

Depending on the total capital level of an insurer, the regulator may apply various measures. If an insurer's total capital drops to 90% of regulatory requirements, the insurer will have to submit a recovery plan. If the total capital drops into the range between 90% and 80% - the regulator may request temporary dismissal of the management, and if the total capital is below 80% of the regulatory requirements, a temporary administrator is to be introduced for a period of three months with a possibility of further extension up to 1 year.

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