The problem of compulsory car insurance continues to grow in Azerbaijan.

Since the second half of last year, insurance companies in Azerbaijan have begun to refuse compulsory insurance of small engine cars both through agents and online.

This was confirmed by insurance agents, including insurance experts, who are market participants in their statement to "APA-Economics".

The situation has become more difficult now.

What causes the problem of compulsory auto insurance?

Compulsory car insurance is one of the main drivers of the insurance market.

The mandatory introduction of compulsory auto insurance created conditions for 1.4 million car owners to be involved in this insurance.

According to the statistics published by the Central Bank of Azerbaijan, in 11 months of last year, insurance companies collected a total of 102.2 million manat insurance premiums for compulsory auto insurance.

However, higher car accident risks also increase the premiums.

Insurance companies paid 82.3 million manats for the same period.

In other words, out of every 100 manats they collected, they returned 81 manats to the citizens as payment.

This number is higher for individual insurance companies.

It has been reported that some insurance companies pay more than they collect.

Cars with small engines are usually

since they are used in taxi activities, the majority of accidents are related to these vehicles.

Considering this, insurance companies try to avoid insuring these cars by various means.

In order to change the situation and to calculate the insurance premium more adequately, the Central Bank of Azerbaijan introduced a new rule for calculating the insurance premium for cars from October 1 last year.

Previously, the insurance premium varied according to the engine volume of the car, but with the new rule, risk factors such as age, driving experience, driving intensity, service life and so on are taken into account.

This is reflected in the amount of collected insurance premiums.

The increase in insurance premiums has not changed the situation

Ziya Aliyev, Director General of the Central Bank

In an interview with APA-Economics, he said that the new approach increased insurance collections by 12% in the 11th month of 2022 compared to the same period last year.

An increase in premiums will further encourage insurance companies to take on risks.

The current situation shows that insurance companies do not appear to be enthusiastic about compulsory car insurance.

Except for one or two insurance companies, other insurance companies refuse to insure cars, and insurance agents are also blocked from insuring those cars.

A citizen who insured his car through an insurance agent he knew without going anywhere before has found himself in a desperate situation.

The electronic insurance system on the official website of most insurance companies is formal in nature, rather than complicated and functional.

When applying to the offices of insurance companies, the citizen has to wait in a long queue.

Prolonging the process also puts the citizen at risk of being fined by the traffic police for not having mandatory auto insurance.

Avoidance of mandatory auto insurance by insurance companies is a violation of the law

Insurance expert Ilkin Ibrahimov

told "APA-Economics" that the process was a violation of the law.

But the opposite happens.

First of all, this issue is a violation of consumer rights.

At the same time, it is a violation of the requirements of the Civil Code and the law "On Compulsory Insurance".

Ilkin Ibrahimov added that the Compulsory Insurance Bureau is the manager of the software related to compulsory car insurance, that is, it can monitor the entire process, including the blocking of insurance companies related to small engine cars.

Therefore, the Bureau is responsible for the issue.

Another insurance expert is Ali Bayramov

He told "APA-Economics" that before, a citizen could insure his car by contacting an insurance agent he knew without going anywhere: "It was profitable for the citizen.

The "COVID-19" pandemic and related economic processes in the world accelerated global inflation.

This, in turn, increased the cost of all products, as well as auto parts and services, and ultimately the volume of insurance company payments.

Previously, the company that wanted to attract customers for compulsory car insurance offered a high commission to the insurance agent, but found that it was no longer profitable.

Insurance companies have investigated and found that cars with smaller engines are more harmful.

The way out of the situation is to cancel the commission they previously offered to insurance agents,

at the same time, they saw the said malicious cars being blocked through the system.

As a result, the current situation appeared.

The expert added that in order to solve the problem, the requirements set by the Central Bank to insurance companies should be made more strict.

Implemented innovations are not a medium and long-term solution.

In general, insurance experts believe that the general approach to the insurance sales market is about to change.

It was announced that insurance agents would be gradually removed from compulsory car insurance.

As in other areas, the transition to an electronic system is a must in the insurance sector, and citizens must adapt to insuring their cars electronically.

The main issue is that the mentioned electronic system, in addition to solving the listed problems, is simple, easy to use and more accessible to citizens.

Insurance companies were given 10 days to comply with the new requirements

In its January 16 announcement, the Central Bank of Azerbaijan stated that it is illegal to refuse compulsory car insurance and warned insurance companies in this regard.

CBA said that citizens facing insurance problems should contact the hotline number 966 of the Central Bank and the problem will be solved as soon as possible.

In addition, by the decision of the Chairman of the Central Bank, Taleh Kazimov, changes were made in "Additional Requirements for Permitting Compulsory Insurance Types".

According to the amendment, insurance companies providing compulsory car insurance have been given 10 days to adjust their official websites to the technical requirements related to the online sale of the said type of insurance.

This period ends on January 21.

Companies that refuse refer citizens to other companies

Regarding the situation, it was not possible to learn the attitude of the "Gala Insurance", "Xalq Insurance" and "Ateshgah Insurance" companies.

Another interesting fact is that some companies that refuse compulsory car insurance refer citizens to other insurance companies.

Maruz Azmammadova, the head of the Marketing Department of PASHA Insurance

, one of the main players in the insurance market

, told APA-Economics that PASHA Insurance is among the companies that refuse car insurance.

According to Maruz Azmammadova, redirecting citizens to other companies causes natural congestion in the offices of insurance companies.

He noted that citizens can also use the mobile application of "PASHA Insurance" online for car insurance.

It is possible for drivers living in the regions to insure their cars by approaching the branches in that area.

Regarding the request of the Central Bank, Maruz Azmammadova said that updates are currently being made to the system for the online sale of compulsory auto insurance.

Maruz Azmammadova added that the company's strategy is to develop the online direction by offering a digital solution, however, they work with a limited number of officially licensed professional agents.

"Mega Insurance" company said that in the last month, requests to the company regarding compulsory car insurance, especially small engine cars, have increased sharply: "Clients of other insurance companies are also directed to us.

The phones of "Mega Insurance" are not silent.

It is physically impossible to answer all inquiries immediately.

That's why there are queues.

But we try to insure all cars that apply to us."

"Mega Insurance" also informed that insurance agents continue their work.

In response to the inquiry of "APA-Economics", "AtaSıgorta" company stated that there was no significant increase in the number of applications related to compulsory car insurance.

Every car is insured according to the application.

The company also noted that there may be technical problems with online insurance.

But from the time determined by the Central Bank, it will be possible to carry out compulsory car insurance on the company's official website.

ASA: From January 21, compulsory auto insurance will be implemented without any difficulties

Azerbaijan Insurers Association informed "APA-Economics" about the issue that the next steps are being taken to ensure access to insurance services in Azerbaijan and to improve electronicization in the sector.

From January 21, every vehicle in the country will be able to be insured electronically and without any difficulties.

It should be noted that according to the "Insurance Activity" law, administrative sanctions are provided against insurance companies that do not fulfill the requirements.

Insurance companies can face sanctions ranging from administrative fines, to the removal of their managers and the revocation of their licenses.

How strictly the insurance companies will comply with the Central Bank's requirements and the Central Bank's approach to the issue will be known in a few days.