Azerbaijan changes mandatory motor insurance rules

The Central Bank of Azerbaijan has amended the rules for calculating premiums under compulsory third-party liability insurance for vehicle owners.

The decision was adopted by the CBA board on April 1, 2026.

Under the new rules, the previously used Bonus-Malus system is being replaced by an insurance history coefficient mechanism. Insurance premiums will now be determined based on the insured person’s previous insurance history and the number of at-fault claims.

The insurance history coefficient has been set in a range from 0.60 to 3.00. It will be calculated separately for each individual and may vary depending on the vehicle.

When concluding an insurance contract for individuals, the premium will be based on the highest insurance history coefficient among the vehicle’s owners. The calculation will also take into account persons who owned the vehicle during the previous month.

For legal entities, except those engaged in taxi operations, the insurance history coefficient has been set at 1, with no surcharges or discounts applied.

Drivers with a claim-free insurance history will receive a 5% discount each time the policy is renewed. In the event of an at-fault claim, the insurance history coefficient will increase by 30% for each such incident.

The coefficients applied depending on the number of vehicle owners have also been updated: the coefficient will be 1 for vehicles with up to four owners and 1.15 for vehicles with five or more owners.

Bonus-Malus indicators formed under the previous system will be integrated into the new mechanism and used as the insurance history coefficient during the transition period.

The changes will take effect two months after the decision is published.