New law on compulsory insurances not to have significant impact on property prices in Azerbaijan

Introducing new Law on Compulsory Insurances will not have a significant impact on property prices in Azerbaijan, the head of the State Insurance Supervision Service under the Ministry of Finance of Azerbaijan Namik Khalilov said in an interview with "Əmlak Bazarı" magazine issued by the Participants of Property Market public union.

"As the rate for property insurance is 0.3% of the value of insured property, the implementation of this law will have no significant impact on property prices in Azerbaijan," Khalilov said.

He said under this bill, the insurance premium will be determined in accordance with the tariffs, which will be set by the insurance supervisory authority.

"Later, these premiums will be paid to the owner of the property by the insurance company based on the relevant insurance contract," "Khalilov said.

Khalilov said the bill does not envisage direct punishment of those who have not insured their property. However, he said, they can not get loans, grants and other incentives from the state.

If the assets of such persons suffer any damages, compensation, allocated by the competent authorities, will not exceed 20% of the amount of damage.

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 operation of real estate, provides insurance protection for third parties from harm caused by using this property. This insurance will apply to legal entities and individuals engaged in entrepreneurial activities. The amount of reimbursement for this type of insurance for damage to health will be 5,000 manat for one person, 50,000 manat for property.

Compulsory insurance for passengers will be applied to persons using the vehicles, regardless of its form. The amount of the insurance coverage will be 5,000 manat per person. Until now, this type of insurance is regulated by a law adopted in 2003, but the acting form is unacceptable today and creates problems in obtaining compensation.

The draft law contains a differentiated approach in determining the insurance rate, depending on the type of vehicle. The fee for compulsory motor TPL insurance on the property amounts to 5,000 manat (currently 1,000 manat), health - 50,000 manat (5,000). At present, this activity is regulated by the law of 1996.


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