According to ALIYEY, the law on compulsory insurance was adopted in 2011, and since then the insurance market has evolved and increased a lot, economic situation has changed as well as prices. On the top of that, modern technologies have been widely introduced. For now, MTPL and compulsory insurance against industrial accidents and occupational diseases are digitalized. Also new agricultural insurance mechanism, which is expected to be launched this year, will be digitalized. And all mentioned changes require the relevant legislation to be amended accordingly, he noted.
The Chairman emphasized, that in case of compulsory insurance all important elements are established by law, such as tariffs, insurance coverage, deductibles and other conditions. Thus, the legislation in this segment is of prime importance.
"So, in the law on compulsory types of insurance, regarding MTPL policy holders, both insurance rates and insurance coverage (AZN 5,000/USD 2,941) for property damage and (AZN 25,000/USD 14,705) for damage to health of individuals, are established at fixed rates. Over the past nine years, the cost of both spare parts and repair services has increased significantly. As a result, on the one hand, the size of insurance coverage for property damage does not meet the realities, covering only insignificant losses, and on the other hand, tariffs that have remained unchanged over the past period have made this type of insurance highly loss-making," he explained.
The bonus-malus system also needs to be reviewed, as ALIYEV believes, since it has already led to 40% decrease of the average premium amount, and insurers have not enough reserves to sell this product in an effective way.
The Chairman also noted, that besides MTPL, property insurance should become electronic. In addition, this insurance type has a lot of weak points, among which experts underline absence of any liability which should be added.
The Association of insurers of Azerbaijan already prepared and submitted proposals on amendments to the Central Bank in the beginning of this year.