As Atakhan Hasanov, director of the Financial Stability Department at the Central Bank of Azerbaijan (CBA), said at a press conference dedicated to the presentation of the Financial Stability Report, the insurance sector continued to grow in the first half of 2026, driven mainly by voluntary insurance products.
“Amid market expansion, the insurance sector's assets have also continued to grow. In the first six months, the sector's assets increased by 5.8% to AZN 1.3 billion (USD 764.7 million). The insurance sector is one of the key institutional investors in the financial system. Investment activity continued during the reporting period, with government securities, bank deposits, and corporate securities accounting for the bulk of the investment portfolio”, Hasanov noted.
According to him, the insurance sector's loss ratio increased by 3 percentage points during the reporting period to 60.5%, while the expense ratio stood at 79%. Analysis shows that the loss ratio rose more sharply at several insurance companies with significant market shares.
Hasanov noted that the sector remained profitable despite these developments. Insurance sector profits totaled AZN 90 million (USD 52.9 million) in the first half of the year. The sector's aggregate capital stood at AZN 312 million (USD 183.5 million), exceeding the required capital level by 53%.
The department director emphasized that various measures to regulate and develop the insurance sector had been implemented this year. “Work has been carried out to improve the system for calculating tariffs for compulsory motor third-party liability insurance, and relevant standards have been established for the coefficients used in calculating insurance premiums”, he said. Hasanov added that measures had also been taken to improve the rules governing several types of insurance to increase consumer confidence in insurance services. These included regulatory work on comprehensive motor insurance (CASCO), compulsory motor third-party liability insurance, and personal accident insurance offered to individuals.
According to Hasanov, a draft law prepared to improve the regulation of compulsory property insurance had been submitted to the Cabinet of Ministers for consideration. “In addition, a project to model catastrophic risks specific to Azerbaijan, particularly earthquake risks, has been completed”, he noted.
Hasanov said a draft law aimed at improving the institutional structure of the agricultural insurance system had also been submitted to the relevant government agencies for approval.
Work on improving legislation regarding mandatory real estate insurance in Azerbaijan is in its final stages, as the Executive Director of the Central Bank of Azerbaijan (CBA), Vusal Gurbanov, said at the same press conference. He noted that the main goal of the proposed changes is to increase the transparency of insurance payouts and ensure a more appropriate determination of insurance coverage amounts.
In addition, the Executive Director emphasized that the decline in the number of compulsory insurance policies is due to several factors. "These include changes in indicators related to the terms of insurance contracts, an increase in coverage amounts for certain types of insurance, and the government’s implementation of insurance programs for certain categories", he added.
He noted that there has been a decline in the number of compulsory insurance policies. “One of the reasons for this is the timing of insurance policy issuance. On the other hand, an increase in insured amounts has been recorded for certain types of compulsory insurance. These figures were also influenced by the fact that, for some categories, insurance is provided by the state”, Gurbanov noted.
A representative of the Central Bank of Azerbaijan (CBA) reported that draft legislation on mandatory real estate insurance has been under review with the relevant government agencies for some time and is currently in its final stages. "In addition, the Central Bank continues to work on other conceptual issues arising from the legislation", he emphasized.
According to him, the changes are aimed at ensuring greater transparency in insurance payouts, as well as a more accurate determination of insurance coverage amounts in accordance with the value of the property. Gurbanov emphasized that the proposed changes are not intended to increase the number of mandatory insurance policies. The focus of the bill is to improve the quality of insurance services, streamline insurance processes, and ensure a more accurate assessment of the actual value of property for insurance purposes.
“We do not intend to increase the number of insurance policies. The goal of the bill is to improve the level of service, increase the transparency of insurance payouts, and ensure that coverage is provided in accordance with the value of the property”, the CBA’s Executive Director added.
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