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A while ago, the Ministry of Labor and Social Protection of Population announced that control over employers regarding the acquisition of the insurance type known as compulsory life insurance — officially called “Compulsory insurance against loss of professional working capacity due to industrial accidents and occupational diseases” — has been strengthened, and penalties will be applied to institutions where violations are detected.

We present to your attention an interview with the Head of the Key Client Relations Department of “Atəşgah Həyat” Insurance Company, Vüqar Hüseynli, regarding the role of this insurance type in employment activities and how it is possible to avoid penalties.

What is meant by “loss of professional working capacity due to industrial accidents and occupational diseases”? Which cases are regulated under this type of insurance according to insurance legislation?

This type of insurance regulates cases where an employee loses professional working capacity or dies as a result of industrial accidents or occupational diseases, and the rules for insurance payments made by the insurance company. Here, an insured event is considered a situation that arises during the validity period of the compulsory insurance contract, where the insured loses professional working capacity or dies due to an industrial accident or occupational disease, and which forms the legal basis for payment to the beneficiary.

We would also like to hear your opinion about the importance of this insurance type in work activities. What advantages do employers and employees gain when they are insured under this type?

In the event of an insured incident, the insurance company pays monetary compensation for the lost wages resulting from the employee’s loss of working capacity. The injured person can use the received funds for treatment, additional nutrition, purchase of medication, acquisition of special transport means, or any other purpose they choose.

As a result of inspections carried out by the Ministry of Labor and Social Protection of Population in 2020, it was found that some employers had signed contracts with insurance companies for this insurance type but had not paid the insurance premium, and the contracts were unilaterally terminated by the insurance company. What risks and penalties do employers face in such cases?

According to Article 469.2 of the Code of Administrative Offenses of the Republic of Azerbaijan, in accordance with the Law of the Republic of Azerbaijan “On compulsory insurance against loss of professional working capacity due to industrial accidents and occupational diseases,” failure to conclude a compulsory insurance contract by individuals or legal entities required to insure relevant risks results in fines of 500 AZN for individuals, 1,500 AZN for officials, and 5,000 AZN for legal entities.

How can these penalties be avoided?

Only by insuring on time and complying with legal requirements. :)

What are the current overall indicators in the insurance market for this type of insurance? What changes and innovations are expected in 2021 compared to previous years?

Insurance premiums have increased compared to previous years. The reason for this is the development of the private sector in Azerbaijan. Insurance contracts are now concluded via the e-government portal. Since this portal is connected to the e-gov.az government system, it provides convenience and ease for both insured persons and insurance companies. Settlements are carried out more quickly and accurately. However, additional improvements and enhancements are still required. It is expected that new features will soon be introduced and launched on the portal.