The Central Bank of the Republic of Azerbaijan has approved amendments to the rules for compulsory motor vehicle owners’ civil liability insurance, updating the current “Bonus-Malus” approach to a new model based on an individual Insurance History Coefficient. The changes are intended to simplify the pricing mechanism while keeping it risk-based and linked to the likelihood of causing damage to third parties. Under the revised approach, a driver who does not cause an insured accident under this insurance type will receive a 5% premium discount, while a 30% premium surcharge will apply for each event where damage is caused to third parties’ health or property. Where more than one person is legally entitled to drive the insured vehicle, the Insurance History Coefficient of the highest-risk person will be used. Accident-related premium surcharges will be applied to the person who was driving the vehicle and caused the damage, rather than to the party that concluded the insurance contract; legal entities will not be subject to the Insurance History Coefficient, although surcharges will still apply to premiums linked to drivers who cause damage while driving a legal entity’s vehicle, and the existing application of the coefficient to taxi operators will continue. The amendments will enter into force two months after publication.
Central Bank of the Republic of Azerbaijan 2026-04-21
Central Bank of the Republic of Azerbaijan replaces Bonus-Malus with an Insurance History Coefficient for compulsory motor liability insurance
The Central Bank of Azerbaijan has amended compulsory motor vehicle civil liability insurance rules, replacing the “Bonus-Malus” system with an individual Insurance History Coefficient to simplify and maintain risk-based pricing. Drivers receive a 5% premium discount for accident-free periods and a 30% surcharge for each insured event causing damage, with surcharges applied to the at-fault driver and the highest-risk driver’s coefficient used where multiple drivers are authorised. Legal entities are exempt from the coefficient, but surcharges still apply to at-fault drivers’ premiums, and existing treatment of taxi operators is maintained.