AZE.US
Azerbaijan’s insurance market has begun new legal discussions on the possible integration of voluntary CASCO insurance with mandatory motor liability insurance.
The debate comes amid declining demand in the voluntary insurance segment, as many drivers say the financial burden has become too high.
Drivers who purchase CASCO insurance currently pay at least around 500 manats per year. In addition, they must separately pay close to 100 manats for mandatory auto insurance.
Some motorists believe that if CASCO policyholders were exempted from paying separately for mandatory insurance, or if mandatory insurance were included in a single package, interest in CASCO could increase.
However, insurance experts say the two types of coverage serve different purposes.
Abbas Miskarli, executive director of the Azerbaijan Insurers Association, said mandatory auto insurance protects the interests of third parties in road accidents. Without such a mechanism, drivers involved in accidents would have to resolve compensation issues among themselves more often, which may not always be possible.
According to him, CASCO and mandatory insurance cannot be viewed as fully interchangeable products.
At the same time, Miskarli said drivers can include additional third-party liability coverage in their CASCO policies. For example, under mandatory motor insurance, the compensation limit for property damage is about 5,000 manats. If this amount is not enough, vehicle owners may voluntarily purchase additional coverage through CASCO.
Transport expert Samuran Samadbayli said interest in CASCO could be increased not only through merging insurance products, but through more flexible and “smart” insurance mechanisms.
He pointed to international experience with telematics-based insurance, where a driver’s behavior behind the wheel is assessed. Drivers with lower risk profiles, including those who avoid traffic violations over a long period, may be offered discounted packages.
According to the expert, such a system could help increase demand for insurance, improve road safety and support the development of the insurance market.
Against this backdrop, Azerbaijan is expected to introduce new approaches in the voluntary insurance sector.
Aliyar Mammadyarov, first deputy chairman of the Central Bank of Azerbaijan, has said the changes will be aimed at aligning the market with international insurance principles, more clearly defining the rights and obligations of all parties and improving consumer satisfaction.
Experts stress that any benefits, discounts or new insurance mechanisms should be introduced only on the basis of existing legislation and proper legal assessment, so that the stability of the insurance system is not undermined.
AZE.US