Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | Compulsory Insurance Bureau: Responsibilities, Challenges, Priorities BAKU, 2012

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | COMPULSORY INSURANCE BUREAU: HISTORY OF DEVELOPMENT On October 8, 2011 the Law of the Azerbaijan Republic «On Compulsory Insurance» comes to force; On October 19, 2011 State Insurance Supervisory Service with the participation of 6 insurance companies holds the constituent assembly of Compulsory Insurance Bureau ( CIB ) On November 29, 2011 CIB passes the state registration with Ministry of Justice as an Union of Legal Entities On December 06, 2011 CIB is registered by the Ministry of Taxes On December 16, 2011 The first MTPL is issued by means of information system of CIB.

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | PRIMARY MISSION OF CIB protection of interests of insured persons and third parties suffering damages and losses stabilization and development of the compulsory insurance system and fulfillment of duties prescribed by the Law of Azerbaijan Republic On Compulsory Insurance

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | PRIMARY FUNCTIONS OF CIB The CIB shall carry out the following key functions stipulated by the Law: coordinate activities of CIB participants (hereafter: participants) represent and protect interests of participants when interfacing with local and international organizations provide recommendations and initiate adjustments to the legislation and practical procedures associated with types of compulsory insurance development and application of guidelines for technical expert examinations in relation with investigation of claim-cases and assessment of damages

PRIMARY FUNCTIONS OF CIB provide compensation payments to third persons, injured on road accidents ensure availability, stable usage of an electronic information system and its integration with other electronic information systems; availability and centralized control of compulsory insurance certificate forms as per provisions of the same law

REQUIREMENTS FOR CIB PARTICIPATION obtain preliminary consent from State Insurance Supervisory Service install Participation fee ( AZN) install Security Deposits as follows: – Real estate ( AZN) – third party liability associated with the use of the real estate ( AZN) – third party liability of owners of motor vehicles ( AZN) – personal accident insurance of passengers ( )

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | At present the register of participating insurers of bureau already includes 12 insurance companies CURRENT CIB PARTICIPANTS 1. OJSC «АTƏŞGAH» INSURANCE COMPANY 2. OJSC «STANDARD INSURANCE» 3. OJSC «АТАSIĞORTA» 4. OJSC «XALQ SIĞORTA» 5. OJSC «PAŞA SIĞORTA» 6. OJSC INSURANCE COMPANY «AXA MBASK» 7. OJSC «AZSIĞORTA» 8. OJSC «ALFA SIĞORTA» 9. OJSC MEQA SIĞORTA" 10.Commercial State Insurance Company of the Republic of Azerbaijan 11.OJSC "İPƏK YOLU SIĞORTA 12.OJSC AZƏRBAYCAN SƏNAYE SIĞORTA

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | CIB FUNDS & RESOURCES compulsory payments made by participants monetary funds raised from debt securities issued by the Bureau incomes derived as a result of direct investment by the CIB funds received from grants, donations or other sources not prohibited by the legislation borrowed funds received to cover lacking amount for compensation payments funds received by exercising the subrogation right

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | INVESTMENT PORTFOLIO INVESTMENT PORTFOLIO - 6,4 MILLION AZN* THE AVERAGE PROFITABILITY - 8 % PER ANNUM THE SUM OF GUARANTEE DEPOSITS – 4,6 MILLION AZN* *As of June

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | TYPES OF COMPULSORY INSURANCE COMPULSORY PERSONAL ACCIDENT INSURANCE OF PASSENGERS COMPULSORY REAL ESTATE INSURANCE COMPULSORY THIRD PARTY LIABILITY INSURANCE ASSOCIATED WITH THE USE OF THE REAL ESTATE COMPULSORY THIRD PARTY LIABILITY INSURANCE ASSOCIATED WITH THE USE OF THE REAL ESTATE COMPULSORY THIRD PARTY LIABILITY INSURANCE OF MOTOR VEHICLES

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | COMPULSORY REAL ESTATE INSURANCE Compulsory Real Estate Insurance is used to compensate losses that are caused by damages, destruction or any kind of loss of the real estate caused by fire or other natural disasters. The following types of real estate property are subject to compulsory insurance: -residential and non-residential premises -residential houses -industrial buildings -apartments

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | COMPULSORY REAL ESTATE INSURANCE Settlement Location Amount of Insurance franchiseInsurance Premium Baku Ganja, Sumgait, and Nakhichevan other locations Real Estate Insurance premiums to be paid on houses and apartments belonging to individuals (AZN) * Real Estate Insurance premiums to be paid on non-residential as well as industrial premises are subject to calculation based on the guidelines developed by the Ministry of Finance

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | COMPULSORY THIRD PARTY LIABILITY INSURANCE OF MOTOR VEHICLES Individuals (AZN)Legal Entities (AZN) CARS AND OTHER VEHICLES MADE ON THEIR BASE min 50 - max 250min 60 - max 300 LORRIES AND OTHER VEHICLES MADE ON THEIR BASE min 150 – max 250min 180 – max 240 MINIBUSES, BUSES AND OTHER VEHICLES MADE ON THEIR BASE; min max 200 min 180 – max 300 MOTORCYCLES AND MOTOR SCOOTERS 5060 TRACTORS, THE VEHICLES USED IN ROAD-BUILDING WORKS, WOOD AND RURAL FARMS 5060 TROLLEYBUSES AND TRAMS100 For vehicles registered abroad entering the Azerbaijani Republic for the purpose of transit (for one month) – coefficient 0.25

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | COMPULSORY THIRD PARTY LIABILITY INSURANCE ASSOCIATED WITH USE OF REAL ESTATE (Real Estate TPL) Real Estate TPL provides insurance coverage for damages caused to health and property of third parties as a result of use of the relevant property, as well as while carrying of construction, repair, reconstruction or other works within the territory of such property. The following types of real estate property are subject to compulsory insurance: Buildings, constructions, premises Facilities and areas being used by legal entities for the purposes of their operations, as well as by physical persons engaged into entrepreneurial activities without the creation of the legal entity for their activities Real Estate TPL premiums to be paid on non-residential as well as industrial premises are subject to calculation based on the guidelines developed by the Ministry of Finance

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | COMPULSORY PERSONAL ACCIDENT INSURANCE OF PASSENGERS (Passenger Insurance) Passenger Insurance is used for the purpose of securing a compensation for damages caused to health and life of passengers travelling by air, water, railway or automobile transport the insurance amount per passenger in a vehicle AZN

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | COMPULSORY INSURANCE - MARKET DEVELOPMENT HISTORY insurance premium history by type MTPL Real Estate Real Estate TPL Passenger Insurance

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | COMPULSORY INSURANCE MARKET STRUCTURE MTPL ,25 AZN REAL ESTATE ,6 AZN REAL ESTATE TPL ,91 AZN PASSENGER INSURANCE AZN *As of June

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | INDICATORS OF COMPULSORY INSURANCE MARKET DEVELOPMENT TOTAL AMOUNT OF COMPULSORY INSURANCE PREMIUMS RECEIVED TO DATE: 32,646,000 AZN SINCE THE DATE - THE LAW ON COMPULSORY INSURANCE CAME INTO FORCE – A TOTAL OF 426,174 CONTRACTS OF COMPULSORY INSURANCE HAS BEEN ISSUED BY 11 PARTICIPANTS OF BUREAU *As of June

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | «CIB INFORMATION SYSTEM» CIB information system has been developed in accordance to the provisions of the Law On Compulsory Insurance and has the following goals: centralized system of policy issue & registry centralized depository of claim associated documentation automatic system of bonus-malus calculation and associated premiums centralized database of insured persons and vehicles facilitate statistics and reporting information

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | MTPL POLICY STATUS NOTIFICATION From March 13, 2012 subscribers of "Azercell", «Azerfon» and «Bakcell» may query the Compulsory Insurance status of each vehicle by sending an SMS to a short number of SMS must contain one of the following: state registration plate number of vehicle MTPL policy number The system will provide with the following information in return: Validity of insurance policy (TRUE or FALSE) Name of insurance company issued the policy Emergency contact numbers of associated insurance company MTPL policy status or status of vehicle may be also checked at CIB website in a special Check Your Policy section

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | MTPL CLAIMS Damage to property Damage to vehicles Death of the person Damage to health TOTAL Quantity Amount Paid AZN AZN5000 AZN250 AZN AZN *As of June 01, 2012 Note: As per official statistics, covering period of January-May, there were 1035 road accidents, which resulted in 313 victims, and 1144 injured persones.

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | COMPENSATION TERMS Compensation shall be covered by CIB in the following cases: in case an insurer is not able to meet its obligations due to its insolvency; in case of a third persons injury by an unknown motor vehicle; in case of a third persons injury as a result of use of a vehicle operated by a person, who had no compulsory insurance agreement for civil liability of owners of vehicles (provided that, despite a claim being put forward by a victim against the owner of the car to remedy the damage, this claim was not satisfied)

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | AMOUNT OF COMPENSATORY PAYMENTS Amount of compensations to third persons injured at a road accident 5000 AZN in case of death of the individual 4000 AZN for the I group of disability 3000 AZN for the II group of disability 2000 AZN for the III group of disability 1500 AZN receiving heavy injuries without disability assignment 250 AZN receiving slight injuries

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | DEVELOPMENT PERSPECTIVES Integration of electronic information system with information systems of the Ministry of Internal Affairs, State Traffic Police, State Migration Service and the Ministry of Taxes. Inclusion of other types of compulsory insurance into CIB information system Deployment of Bonus-Malus system is planned at the beginning of 2013 Ensuring integration of electronic information system with electronic information systems of CIB participants and full transition away from operating via Web Interface The conclusions of contracts on compulsory insurance on electronic carriers without use of paper forms Entry of the Azerbaijani Republic into system Green card

Compulsory Insurance Bureau Compulsory Insurance Bureau Azerbaijan, Baku 2012 Tel: (+99412) | THANK YOU