Motor insurance market in Azerbaijan: evolution for last 2 years
GENERAL INFORMATION
Compulsory Insurance Bureau (CIB) deals with the protection of interests of suffering
insured persons and third parties, provision of stability and development of
compulsory insurance system with regard to the following types of compulsory
insurance.
• Compulsory real property insurance
•
Compulsory third party liability insurance of motor vehicles (CMTPL)
•
Compulsory third party liability insurance associated with the use of the real
property
•
Compulsory personal accident insurance of passengers.
•
Compulsory insurance against loss of professional work capacity as a result
of labor accidents and occupational diseases
Compulsory Insurance Bureau of Azerbaijan
2
GENERAL INFORMATION
According to the applicable legislation of Azerbaijan, with respect to CMTPL, CIB is a:
• MOTOR BUREAU
• COMPENSATION BODY
• GUARANTEE FUND
• INFORMATION SYSTEM
Currently, CIB has 14 member insurers and 11 of them are eligible to run CMTPL
In the future, CIB shall also operate as a Green Card Bureau after being accepted for
membership to the Green Card System
Compulsory Insurance Bureau of Azerbaijan
3
STATISTICS FOR 2013 AND 2012
COMPARATIVE ANALYSYS 2012 AND 2013
YEAR
NUMBER OF CMTPL INSURANCE
CONTRACTS
AMOUNT OF CMTPL INSURANCE
CONTRACTS
2013
911,909
69,367,582 AZN
2012
916,744
72,024,711 AZN
NUMBER OF CMTPL INSURANCE CONTRACTS:
2013
2012
0,53%
AMOUNT OF CMTPL INSURANCE CONTRACTS:
2013
3,69%
2012
1 EURO = 1.092 AZN
19/03/2014 Official Exchange Rate
Compulsory Insurance Bureau of Azerbaijan
4
MONTHLY AVERAGE CMTPL PREMIUM in AZN for 2013
81.69
82.28
78.62
76.93
77.02
75.76
74.86
73.06
73.36
72.46
71.84
71.3
ANNUAL AVERAGE CMTPL PREMIUM
2013
75,77 AZN
2012
78,40 AZN
2,63 AZN
1 EURO = 1.092 AZN
19/03/2014 Official Exchange Rate
Compulsory Insurance Bureau of Azerbaijan
5
Legal and Physical Persons
13%
Vehicle types
Heavy Duty
0.98%
87 %
Trailer
7.70%
Physical
legal
Bus
2.07%
Truck
14.18%
Motorcycle
0.08%
Passanger car
74.99%
Compulsory Insurance Bureau of Azerbaijan
6
2013- INSURANCE PAYMENTS MADE BY MEMBER INSURERS
PAID CLAIMS UNDER CMTPL INSURANCE
Damage to
vehicles
Damage to
property
Damage to
health
Death of the
person
TOTAL
Quantity
17,363
553
398
133
18,447
Amount (AZN)
23,403,167
822,079
443,934
661,000
25,330,180
COMPARE to 2012
2013
2012
25,330,180 AZN
3.7 times
6,823,630 AZN
1 EURO = 1.092 AZN
19/03/2014 Official Exchange Rate
Compulsory Insurance Bureau of Azerbaijan
7
TERMS OF COMPENSATION of CIB
Compensation shall be covered by CIB in the following cases:
•
in case an insurer is not able to meet its obligations due to its insolvency;
•
in case of a third person’s injury by an unknown motor vehicle;
•
in case of a third person’s injury as a result of use of a vehicle operated by a
person, who had no CMTPL insurance agreement
2013- COMPENSATION BY CIB
Damage to health
Death of the person
TOTAL
Quantity
17
7
24
Amount
20,191.5 AZN
34,200 AZN
54,391.5 AZN
Compulsory Insurance Bureau of Azerbaijan
8
TRANSIT POLICIES
Statistics on transit vehicles entered Azerbaijan during 2012 and 2013
Number of Vehicles
Total Premium Amount
Average Premium
224,527
245,896
7,098,461 AZN
6,991,715 AZN
31,6 AZN
28,4 AZN
2012
2013
84
In 2013 - 224 insurance accidents took place
with participation of cars that are registered
abroad and entered the territory of Azerbaijan
with the aim of transit.
73
44
Total insurance payment in the amount:
9
Turkey
Georgia
Russia
Iran
5
Germany
9
300,215 AZN
Others
Compare to 2012, average premium is lower due to amendment to the compulsory insurance legislation providing for decrease of the
premium for monthly CMTPL agreements for foreign vehicles from 25% to 20% of the amounts of the annual premiums. Another reason is
that under the old legislation foreign vehicle owners were allowed to obtain only monthly CMTPL agreements. However by the same
amendment to the legislation, foreign vehicle owners may chose to obtain monthly or annual CMPTL agreements.
Compulsory Insurance Bureau of Azerbaijan
9
CIB INFORMATION SYSTEM
CIB information system has been developed in accordance to the provisions of the Law “Compulsory
Insurance” and has the following goals:
•
•
•
•
•
centralized system of CMTPL policy issue & registry
centralized depository of claim associated documentation
automatic system of bonus-malus calculation and associated premiums
centralized database of insured persons and vehicles
facilitate statistics and reporting information
Achieving the above mentioned goals significantly minimized the room for potential fraud in the field.
In addition to achieving the goals it was managed to add more value to CIB’s IT system:
• Modern equipment and licensed software of world leading IT producers was used for the IT
infrastructure of CIB
• Protection of intellectual property is one of the main aspects of Bureau`s IT policy. Therefore CIB
requested European IT security company Akhela (Italy) to penetrate the Network Security of CIB
for auditing purposes. The safety of CIB’s IT system was positively evaluated by Akhela.
• SMS notification during policy transactions
• In 2013 total of 749,594 SMS notifications were sent to CMTPL policy holders regarding the
important status changes and notifications
Compulsory Insurance Bureau of Azerbaijan
10
CIB INFORMATION SYSTEM
The CIB’s IT system integration with the state authorities
The compulsory insurance legislation mandates the integration of the CIB’s IT system with
the state authorities like Ministry of Taxes, Ministry of Internal Affairs, and etc.
• The aim of this integration is to increase efficiency of data flow and simplify the data
entering process into the CIB’s IT system. This will help to decrease system user errors
upon issuance of compulsory insurance policies to insured entities by using the
necessary data already existing in the systems of the relevant authorities (e.g., personal
ID data, details of legal entities and individual entrepreneurs and etc.).
• During past periods, numerous measures have been implemented in order to organize
the required infrastructure and framework for such integration. The integration process
is in the finalization stage and should be completed during forthcoming months.
Compulsory Insurance Bureau of Azerbaijan
11
CLAIMS HANDLING SOFTWARE
•
CIB has been conducting preparatory works to develop a complex software solution for the
member insurance companies. CIB put together a working group consisting of highly skilled claim
handling personal of each member insurance companies.
•
Working group was tasked to cooperate with CIB on this software development process by sharing
their experience and knowledge.
•
They visited Turkish Motor Insurers’ Bureau, Swedish Motor Insurers, AXAMBASK Azerbaijan,
Baltic countries and other countries and gained valuable knowledge and experience which was
used during the business process development
•
CIB, member insurance companies and other related parties are highly interested on investing to
finalize the development of better claim handling system.
•
Project description was offered to following companies for proposal: Nexum in Latvia, Cybersoft in
Turkey, NTT Data in U.S. and Gratex in Slovakia
•
Gratex in Slovakia proposed the most cost affective and shortest project implementation time,
therefore CIB decided to award the project to Gratex
Compulsory Insurance Bureau of Azerbaijan
12
GREEN CARD
COMPLEX PREPARATORY WORKS WITH RESPECT TO EXPECTED JOINING GREEN CARD
SYSTEM:
•
STUDY OF THE INTERNATIONAL EXPERIENCE - established high professional relationships with
motor bureau of various countries implementing Green Card system, and getting acquainted
with their work experience
•
LEGAL ASPECTS - harmonization of the Azerbaijani compulsory insurance legislation with the
requirements of the system, as well building necessary legal grounds for implementation of the
system in Azerbaijan and for the proper activities of CIB and insurance companies within the
system in the future
•
FINANCIAL ASPECTS - dealing with the banks and reinsurance companies and brokers with
respect to the required financial guarantee to the Council of Bureaux (Managing Organization of
the Green Card system), and dealing with formation of reserves necessary as a guarantee for the
future liabilities arising out of the activities within the system
•
OTHER PREPARATORY WORKS- addressing various technical and organizational issues that would
arise due to implementation of the system like building the necessary infrastructure and etc.
Compulsory Insurance Bureau of Azerbaijan
13
GREEN CARD
MEMBERSHIP WITH THE GREEN CARD SYSTEM: CURRENT STATUS
• Preparatory works carried out during short period of time were highly assessed by the
Council of Bureaux;
• Preliminary consent was given and membership of CIB was expected for settlement in
2014 General Assembly to hold in the late May – beginning of June with the activation
date of January 1, 2015;
• Since the required legal work to amend the Law “On compulsory insurance” and the
CIB’s Charter have not been yet adopted, considering time shortage till the 2014
General Assembly, the CIB’s membership postponed to 2015 General Assembly.
• Currently, the expected activation date for membership is January 1, 2016
Compulsory Insurance Bureau of Azerbaijan
14
PROBLEMS & SOLUTIONS
Evaluation of damages
• Evaluation of damages of motor vehicles for the purposes of MTPL is one of the current
important problems in the insurance sector. Currently, there are no unified rules and
regulations in place providing advanced solutions in this area, and therefore, insurers apply
different approaches and rules for evaluation of damages to motor vehicles. Numerous
disagreements take place between policy holders, insurers and body shops with respect to the
amount of damage. Lack of the advanced solutions on this problem negatively affects the
overall insurance sector
•
CIB has been conducting negotiations with various well-known international suppliers of IT
solutions in the field of evaluation of damages including Audatex.
•
Audatex expressed its interest to the Azerbaijan market based on the results of its business
and investment analysis
•
Currently, the negotiations with Audatex are continued
Compulsory Insurance Bureau of Azerbaijan
15
PROBLEMS & SOLUTIONS
Building the trust and promoting awareness about compulsory
insurance business in Azerbaijan
• Unfortunately one of the biggest problems of insurance market in Azerbaijan is the lack of
knowledge about insurance among the citizens. In most cases insurance contracts are signed by
the citizens without the clear understanding of each party’s legal responsibilities.
• CIB invested a lot on informing the population about the insurance business and the benefits of
having an insurance.
• Through out the 2013 series of TV and radio advertisements have been broadcasted to promote
the awareness among the population about the importance of compulsory insurance and its
benefits.
Compulsory Insurance Bureau of Azerbaijan
16
PROBLEMS & SOLUTIONS
Overall
• Due to complete change in the CMTPL rules, regulations and practices in 2011 and subsequently
establishment of CIB not only positively affected the compulsory insurance sector it also
created significant dynamic in the insurance market
• One of the main directions of CIB’s activities for the past 2 years was to identify the problems
and undertake the continues measures to solve them
• CIB shall continue to investigate the problems and its solutions also by studying and
implementing the best international practices
Compulsory Insurance Bureau of Azerbaijan
17
Thank You
İİF 2014
The International Insurance Forum