BAKU, Azerbaijan, October 21.
New approaches are being implemented in Azerbaijan to calculate
insurance premiums based on individual risks, with digital
technologies and data analysis playing a crucial role in this
process, Head of the Insurance Intermediaries Supervision
Department at the Central Bank of Azerbaijan, Ramin Jafarov, said,
Trend’s
correspondent reports from the event.
He made the remarks during a training titled "Role of the
insurance sector in financial stability” in Baku on Wednesday.
According to him, digital transformation within the insurance
sector facilitates more efficient operations for insurance
companies and enables the provision of personalized services to
clients.
Jafarov noted that the development of insurance technologies
(insurtech) has made the processes of product delivery, claims
settlement, and payouts faster and more effective. The use of
artificial intelligence and chatbots in these processes is also
expanding.
The department head added that digitalization is creating new
opportunities for the assessment of insurance risks. While the
traditional approach involves designing insurance products based on
the general characteristics of specific consumer groups, data
analysis and artificial intelligence now enable the determination
of premiums tailored to individual risk profiles.
He explained this by citing the example of motor insurance.
Specifically, a data-driven underwriting approach (the assessment
of insurance risks) allows for the individual risk indicators of
the policyholder to be taken into account separately.
"Previously, granting a power of attorney to another person to
drive a vehicle could affect the insurance premium, often leading
to an increase. The new approach, however, allows for the
policyholder's own risk profile to be assessed independently.
Issuing a power of attorney to another individual does not
automatically result in a change to the policyholder's personal
premium rate," he remarked.
According to Jafarov, developing products that align with
customer needs is another key direction for the sector's growth. In
this regard, offering voluntary civil liability insurance coverage,
in addition to mandatory motor insurance, expands the scope of
protection available to customers. He noted that insurance
products, which can be activated as the need arises, offer
additional opportunities for customers. For instance, travel
insurance can be purchased for short-term trips abroad, even for
periods as brief as three to five days.
The department head emphasized that the assessment of
climate-related risks has also become a pressing issue for the
insurance sector. According to him, the risks posed by natural
disasters and weather-related events in recent times necessitate
the adoption of new risk assessment models by insurance
companies.
He mentioned that, in this context, the development of risk maps
to identify catastrophic risks is of great importance. Given that
Azerbaijan is located in a seismic zone, efforts are currently
underway to create a national risk map, incorporating the expertise
of international specialists.
