As AHMADOV explained, the insured amount for MTPL segment was set at AZN 5,000 (~USD 2,940) for both bodily injuries and damage caused to property of third parties.
"Over the past period, many economic indicators have changed. Several waves of devaluation seriously affected the prices of spare parts and components for cars, as well as the cost of their repairs," he said. Thus, the existing insurance amounts seem to be irrelevant.
It is also worth noting here that market MTPL loss ratio is quite high. In 2019, the indicator reached 67%, while in 1Q2020 jumped to 84% with GWP shrinking by 4% y-o-y, the Executive director of the Bureau noted.
Besides, the bonus-malus system of MTPL also requires a serious review, as the Chairman of the Supervisory Board of Azerbaijan Insurers Association Azer ALIYEV emphasized:
"It should be noted that often citizens who sell their cars on the basis of a power of attorney do not cancel the MTPL agreement that applies to the motor vehicle being sold, which in turn can lead to undesirable consequences associated with compulsory insurance in the future. (...) So, malus class coefficients (fines) accrued under the Bonus-Malus system for traffic accidents happening due to the fault of a new car owner before the expiration of the current MTPL policy will be registered in the name of the previous owner."
According to ALIYEV, this system resulted in MTPL average premium decrease over the past few years and a loss ratio increase. As he noted, due to the above mentioned reasons and severe competition within the Azeri market, many insurers refused active sales for this insurance type. ALIYEV believes that the system should be reviewed in such a way to exclude cases of abuses by unscrupulous vehicle owners and let the data of losses reflect the real situation.
The compulsory insurance in Azerbaijan is provided by the licensed companies, included in the Compulsory Insurance Bureau. Currently, there are 15 insurers, 4 of them operating in life insurance and 11 - in non-life.