1. Motor insurance market in Azerbaijan: evolution for last 2 years

2. Compulsory Insurance Bureau of Azerbaijan
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

3. Compulsory Insurance Bureau of Azerbaijan
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

4. 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:
AMOUNT OF CMTPL INSURANCE CONTRACTS:
2013
0,53%
2013
3,69%
2012
2012
1 EURO = AZN 19/03/2014 Official Exchange Rate
Compulsory Insurance Bureau of Azerbaijan

5. Compulsory Insurance Bureau of Azerbaijan
MONTHLY AVERAGE CMTPL PREMIUM in AZN for 2013
ANNUAL AVERAGE CMTPL PREMIUM
2013
75,77 AZN
2,63 AZN
2012
78,40 AZN
1 EURO = AZN 19/03/2014 Official Exchange Rate
Compulsory Insurance Bureau of Azerbaijan

6. Compulsory Insurance Bureau of Azerbaijan
Legal and Physical Persons
Vehicle types
Compulsory Insurance Bureau of Azerbaijan

7. PAID CLAIMS UNDER CMTPL INSURANCE
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
25,330,180 AZN
2013
3.7 times
6,823,630 AZN
2012
1 EURO = AZN 19/03/2014 Official Exchange Rate
Compulsory Insurance Bureau of Azerbaijan

8. 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

9. Compulsory Insurance Bureau of Azerbaijan
TRANSIT POLICIES
Statistics on transit vehicles entered Azerbaijan during 2012 and 2013
Number of Vehicles
Total Premium Amount
Average Premium
2012
224,527
7,098,461 AZN
31,6 AZN
2013
245,896
6,991,715 AZN
28,4 AZN
In insurance accidents took place with participation of cars that are registered abroad and entered the territory of Azerbaijan with the aim of transit.
Total insurance payment in the amount:
300,215 AZN
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

10. 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

11. 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

12. 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

13. Compulsory Insurance Bureau of Azerbaijan
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

14. Compulsory Insurance Bureau of Azerbaijan
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

15. Compulsory Insurance Bureau of Azerbaijan
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

16. Compulsory Insurance Bureau of Azerbaijan
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

17. Compulsory Insurance Bureau of Azerbaijan
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

18. Thank You
İİF 2014
The International Insurance Forum