ISB: “A risk-based approach has been introduced in the calculation of the compulsory car insurance fee”

ISB: “A risk-based approach has been introduced in the calculation of the compulsory car insurance fee”

“In Azerbaijan, a risk-based approach to the calculation of insurance premiums has been introduced in the updated “Rule on calculation of insurance premium amounts for compulsory civil liability insurance of motor vehicle owners”.

“Report” reports, Rashad Ahmadov, executive director of Compulsory Insurance Bureau (ISB), said this in his statement to journalists. a

“If the risk is high, then the insurance premium is high, and if the risk is low, the insurance premium is low. It cannot be said that an increase in insurance premiums is planned. The base insurance premiums remain the same. There was a bonus-malus ratio before, that is, the increase or decrease of insurance premiums as a rule, it was caused by bonus-malus. In passenger vehicles, its engine size, load capacity in trucks, and the number of seats in vehicles carrying passengers were important. Now more different risks will be taken into account in the calculation of insurance premiums. These are the places where the vehicle is driven, our cities and regions, age of the persons driving the vehicle, driving experience, vehicles owned by legal entities and vehicles used by individuals, as well as the number of persons authorized to drive the vehicle will be important in calculating fees. This is the insurer’s approach . It means performing a risk-based assessment. If the risk increases, insurance premiums should be higher,” he said.

“There are certain changes related to the calculation of the bonus-malus coefficient. Now the calculation of the bonus-malus will be carried out in real time. If previously it was calculated on the basis of the statistics of events that happened in the previous year on January 15 of each year, now the banus-malus coefficient will be calculated in real time. if an event happened yesterday and the insurance certificate will be generated in the system tomorrow, then the event will be taken into account in the calculation of the insurance premium. At the same time, if your event did not happen, it will cause you to pay less insurance premium in real time. This is a risk-based insurance premium calculation approach With this, drivers who commit fewer traffic accidents will be rewarded, while citizens who frequently commit accidents will have to pay higher insurance premiums with a malus coefficient.

ISB still has a role here as before. Compilation of my insurance certificates related to auto insurance in Azerbaijan is done only electronically. Whether the vehicle has an insurance certificate or not is checked electronically by the Ministry of Internal Affairs (MIA) thanks to the integration with the ISB. Earlier, in passenger cars, only information about the engine capacity of the vehicle was obtained and the insurance certificate was generated, now other information will also be obtained from the Ministry of Internal Affairs. Information about the driver’s age, driving experience, and the address where the vehicle is registered will be received, and all of this information will be important in calculating insurance premiums,” added R. Ahmadov.

In addition, he said that at present, in the compulsory civil liability insurance of European vehicle owners, damage caused to third parties is paid by the insurance company: “Only if your vehicle was damaged by a different vehicle, the insurance company of the person who damaged your vehicle is obliged to make the insurance payment. However, new rules regarding the direct settlement of damages have already been approved, and after November 1, if you have insured your European vehicle in any insurance company in Azerbaijan, if another vehicle damages your vehicle, your insurance company will make your payment and then receive the funds paid to you from the insurance company that caused the damage. “The implementation of this krilling mechanism, i.e., the implementation of the debt matching and zeroing mechanism, will be carried out in the information system of ISB.”

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