This Law shall be aimed at improvement of insurance activity and its successful implementation, protection of rights and interests of the insured and insurers, shall regulate of professional activity (expert, actuary agency, broker and executor activities) of physical persons and legal entities on insurance and the relations proceeding from insurance agreements, determine the authority of the government in with regard to insurance.

This law shall not be applied to the relations established in the sphere of social insurance.

Foreigners and stateless persons, foreign legal entities in the territory of the Azerbaijan Republic have the law of insurance on equal status with the citizens and legal entities of the Azerbaijan Republic.

The following basic notions shall be used in this law:

Insurance — relations on protection of property and property interest of the insured.

Life insurance — insurance carried out in connection with death, the cases of complete and partial loss of health and working ability for senility or disability.

In case the term of agreement on life insurance expires or an insurance accident takes place, the insurance amount shall be returned to the insured in consideration with the procedure and terms stipulated in the agreement.

Non-life insurance — insurance against risks related to the liabilities, property and interests of the insured by paying to the insured the incurred loss at the time the insurance accident takes place.

The insured — a physical person signed a contract with the insurer (a physical person get insured) or a physical person considered insured according to the law (with exception of physical persons with limited capacity for work or with capacity for work limited by the court, as well as the persons not baring capacity for work) or a legal entity.

Insurer — an insurance company that is a legal entity founded to carry out only insurance activity and received a special license in accordance with the law.

Insurance risk — a supposed accident against which effected insurance. The accident considered being an insurance risk shall have accidental indications.

Insurance accident — a situation which is the basis for payment of insurance premium to the insured person or persons, pursuant to the law of insurance agreement.

Insurance amount — amount of money which is used for insuring the insurance company and the final limit on insurer’s liabilities, in accordance with the insurance agreement and the law.

Insurance payment — funds paid in money or in kind to compensate the damage incurred to the property or the property interests of the insured person, in case insurance accident takes place.

Insurance premium — amount of money to be paid by the insured to the insurer, in accordance with insurance agreements or this Law.

Insurance tariff — interest rate determined based on actuary calculations for to estimate insurance premium.

Insurance agreement — availability

General social insurance office — the form of organizing of mutual insurance activities on the basis of an agreement singed among the insurers to ensure their paying capacity in insuring of high insurance risks and to guarantee the protection of property interests of the insured.

Fronting agreement — is an agreement from the insurer side implementing fronting on transfer of risks in full at the other insurer's suggestion to this insurer with receiving of brokerage premium based on issuing of insurance certificate and reinsurance agreement;

Insurance certificate is a document confirmimg the availability of insurance agreement concluded between the insurer and insured and reflecting principal of the agreement.

1. The insurance system shall consist of the relevant body of Executive authorities, the insurers, insurance brokers, agents and experts.

2. Insurance legislation is comprised of the Civil Code of the Azerbaijan Republic, current Law and other normative-legal acts of the Azerbaijan Republic and international agreements a party to which is the Azerbaijan Republic.

The governmental and municipal bodies shall not have the right to interfere in the activity of the insurer, to give an instruction on its property and funds, with exception of cases concerning implementation of functions of regulation and management stipulated by the law.

1. In case of singing insurance agreements the insurer, by the requirement of the insured, shall submit information about the license on the relevant type of insurance and the financial status (accounting balance, statement on profit loss) and the auditor’s reference for the previous three years, and about giving perils for re-insurance by the insurer.

2. The insurer confusing the insured person by giving wrong and incomplete information shall bear responsibility, in accordance with the law.

1. The following shall be prohibited for implementation of insurance:

1. The insurer shall have a full name in the Azerbaijan Republic. The word «insurance» and the organizational and legal form shall be indicated in its full name. The insurer’s name may be written in full or shortened form in the foreign language.

2. The symbols of the Azerbaijan Republic and the words «The Azerbaijan Republic», «state», national», «central» shall be used in conformity with the law. The same name can not be used by different insures.

One or several legal entities or physical persons, with exception of political parties, social associations and funds (non-profit organizations), may found an insurer in all organizational and legal forms stipulated by the law to carry out direct insurance activity.

1. The minimum amount of the insurer’s and repeated insurer’s authorized capital shall be determined by a relevant body of Executive authorities, in accordance with the procedure specified by the law.

2. Before passing the state registration the insurer should pay authorized capital in full, except cases stipulated by the Civil Code of the Azerbaijan Republic.

3. Money resources attracted in the form of credit, except the cases stipulated by the law, the resources of state and municipal budgets, resources of out of budgetary funds and other resources under the authority of the governmental bodies can not be used.

4. The correlation of the assets transferred to the authorized capital in the form of a share or the value of property rights to the authorized capital can not be more than 25 per cent.

5. Authorized capital paid by the insurer in money terms may be kept in full in the banks with no lesser rating, than the one indicated by an appropriate executive body from the international credit ratings.

6. Correspondence of value of property invested in the authorized capital with the market value is regulated by an appropriate executive body.

In case higher percentage is not considered in the law, the insurer’s direct or indirect participation in authorized capital in the capital of the legal entity shall not be more than 20 per cent of the insurer’s own resources and the total amount of such participation shall not be more than 50 per cent of its own resources.

The insurers shall operate based on the charter worked out in accordance with this Law.

Information of the amendments made to the charter pursuant to the law shall be delivered to state registration office and the relevant body of Executive authorities within 15 days. Information about the change of the declared authorized capital shall be submitted to the relevant body of Executive authorities immediately.

Amendments made to the charter will be effective for third parties in an order stipulated by the Civil Code of the Azerbaijan Republic.

1. Its charter, in accordance with the law shall identify the managing and internal control structure of insurer.

2. The insurer’s subsidiaries, brunches and representations may be opened in the Azerbaijan Republic and foreign countries in conformity with the procedure specified by the law.

3. The subsidiaries, brunches and representations shall operate in accordance with the regulations approved by the insurer.

4. The insurer shall appoint the managers of subsidiaries, brunches and representations.

1. Insurer’s managers shall meet the following requirements:

Insurers and insurance broker companies may start operation after receiving special license on relevant types of insurance.

Issuing of special permission for provision of insurance services, refusal from giving the permission, stoppage of the term and termination procedure and terms shall be determined by law.

1. Repeated insurance shall be considered the insuring of the risk of implementation of a part of insurer’s commitments before the insured person in other insurer (repeated insurer).

2. The insurer concluded a repeated insurance agreement shall bear full responsibility before the insured person for the undertaken commitments, in accordance with the signed agreement.

1. The insurance facility may by insured by several insurers on the basis of an agreement. The agreement shall specify the terms identifying the rights and obligations based on each insurer’s agreed shares.

2. The insurers shall be able to establish a social insurance office among them for joint insurance of high risks.

3. One of the joint insurers may represent all the partners in relations with the insured person implementing its commitment before the insured person at the level of its amount of share.

1. Social insurance office shall be created both voluntarily and pursuant to the law based on the agreement signed among the insurers.

2. An agreement may be signed for a certain term to insure high risks on a certain big insurance facility or type of insurance or may be termless.

3. The correlation of distribution of risks and commission premiums accepted to the social insurance office among the members of the social insurance office shall be specified in the agreement.

4. In case the risks accepted to the social insurance office is given on its behalf for repeated insurance by one of the social insurance office members, the procedure for participation of all the members in this transaction and distribution of the commitments and the commission premium shall be identified by the members of the social insurance office.

5. The social insurance office shall be managed by the board formed from the leaders (representatives) of insurers who are the members of social insurance office and shall operate in accordance with the regulations approved by it.

1. Union of insurers (Union) shall be established in order to improve the insurance activity in the country, ensure the cooperation among the insurers and to protect their rights and obligations.

2. The Union shall be a non-profit organization with legal entity status.

3. The procedure for elections to the bodies of the Union, adoption of resolutions and payment of fees and the rights and obligations of the members shall be specified in the charter adopted at the general meeting, in accordance with the law.

4. The Union shall have the right to establish the research and professional institutions regarding insurance to improve insurance activity, arrange courses, seminars, conference and other scientific events and insurance offices which are legal entities. The Union may be the member of international and Azerbaijan Republic’s associations and institutions.

1. The insurance agent (agent), irrespective of its organizational and legal form, shall be any legal entity or a physical person engaged in entrepreneuship activity not establishing a legal entity.

2. The insurer shall have the right to sign an insurance agreement and receive insurance premium. This right may also be given to the agent by indicating in the agency agreement.

3. The agent shall act as a mediator on behalf of the insurer and within the delegated authority based on an agreement, as well as may sign an insurance agreement on behalf of the insurer representing it.

4. The secondary agent shall be a physical person or legal entity carrying out agency activity based on an agreement signed with the insurer.

The secondary agents shall not be allowed to sign an insurance agreement or receive insurance premium.

5. The leader of insurer’s management and members, the members of management and other officials shall not be the agents of the insurer where they work.

6. Insurance agents shall meet the following requirements:

7. The relevant body of Executive authorities shall determine the procedure of insurance agents’ activity and their registration.

1. Agents shall submit to the insurer the insurance premium collected during one week at least until the last day of the following week, on condition that the amount of agent’s commission premium should be deducted from that sum. Payment for delay in amount of 2 per cent of the commission premium shall be made to the insurer for each day of delay.

2. The insurer shall make an official warning to the agent for violation of requirement of item 1 of this Article. The insurer shall have the right to terminate the signed agreement one-sidedly, in case such violation takes place within one year from the date of warning. The agents whose agreement terminated based on grounds specified in this item shall not engage in the agent’s activity.

3. Agents shall not pay insurance premiums.

4. VAT shall be deducted from the amount of the insurance premium paid to the insurer.

1. The insurance broker (broker) shall be a legal entity (a broker company) representing the insured in insurance agreement, carrying out preparatory work for signing insurance agreement keeping neutral and independent position in selecting the insurer and in case of necessity, providing assistance in implementation of this agreement or a physical person engaged in entrepreneurship activity without establishing a legal entity.

Repeated insurance broker shall be a broker carrying out mediating activity between the insurer and the repeated insurer on repeated insurance.

2. Broker companies shall receive special license in the manner specified in the law to operate in the Azerbaijan Republic and insure its liabilities in the amount and manner identified by the relevant body of Executive authorities.

3. In the Azerbaijan Republic brokers may insure and re-insurer their insurance risks (except the insurance specified in item 2 of Article 24) in foreign countries only by means of the insurers in the Azerbaijan Republic.

4. Persons sentenced for the crimes against property and for causing crimes of economy and posts shall not engage in broker activity.

5. The relevant body of Executive authorities shall determine the procedure for broker activity.

1. Actuary shall be a person calculating insurance premiums and tariffs and working out the terms taking into account the necessity of formation of normative profit and resources based on insurance regulations, as well as the theory and statistical information related to investment, demographic and other spheres.

2. Insurance expert shall be a specialist implementing expertise, examination or investigation to determine the amount, reasons and nature of the loss incurred as a result of the insurance accident.

3. The relevant body of Executive authorities shall determine the procedure for implementation of activity of actuary and insurance expert and the professional requirements to them.

Executor shall be a legal entity or physical person keeping neutral position in relations with both the insured and insurer, providing assistance in working out the representation to be submitted to the insurer by explaining to the insured the terms of the agreement and carrying out mediating activity providing to inform the insurer about the factors known to him that may impact to taking place of an insurance accident

1. In accordance with the legislation foreign legal entities and physical persons are entitled to establish insurance companies on the territory of the Azerbaijan Republic only jointly with legal entities and physical persons of the Azerbaijan Republic. Total participation share of foreign legal entities and physical persons in the authorized capital of these companies shall not be more than 49 per cent.

Foreign insurers shall not be allowed to operate in the Azerbaijan Republic as a direct insurer.

2. Foreign insurance brokers may establish local brokerage organizations in the Azerbaijan Republic.

Insurers of the Azerbaijan Republic may reinsure their assumed risks taken from local and foreign insurers, including with assistance of local and foreign brokers.

3. The leader or one of his deputies in the joint insurance and insurance broker companies, established with participation of foreign capital should be the citizen of the Azerbaijan Republic.

1. Legal entities and physical persons operating in the Azerbaijan Republic shall insure the insurance facilities (except those numerated in items in the Azerbaijan Republic only in the insurers operating in the Azerbaijan Republic.

2. The following type of insurance shall be allowed in foreign countries:

1. For signing an insurance agreement the insured shall submit to the insurer a written proposal on his intention to sign an insurance agreement or declare it orally.

2. The insurance certificate issued to the insurer attaching the insurance regulations shall approve the fact of signing an insurance agreement.

3. Delivery of false, confusing, or deceiving information to the legal entities and physical persons by the insurer, agent and broker about their rights and obligations, as well as in their booklets, explanatory notes, advertisements and announcements shall be forbidden.

1. The following shall be specified in the insurance agreement (in insurance certificate):

2. Other terms may be specified in the agreement according to the Civil Code of the Azerbaijan Republic and also by consent of the parties.

1. Except otherwise provided by the agreement or the law and the insurance agreement, the insurance agreement shall enter into effect at 24.00 of the day of agreement conclusion.

2. Except otherwise provided in the agreement or in the law of obligatory insurance, the insurance agreement shall become invalid from the date of complete payment of the insurance amount for taking place an insurance accident.

1. Insurance agreement may be terminated in the following cases:

2. The agreement may be terminated before the term of the agreement, in cases specified in the insurance agreement, as well as based on the agreement among the parties by the requirement of the insured or the insurer. The parties shall have to notify each other 30 days in advance in written except for cases stipulated by the legislation.

3. In case the insurance agreement is terminated before term of agreement by the requirement of the insured the insurer shall return to the insured the insurance payments for rest of the term of the agreement, by deducting its expenses; in case this requirement is dealing with the insurer’s violation of the insurance regulations it shall return to the insured the insurance payments completely.

In case the insurance agreement is terminated before the term of the agreement by the requirement of the insurer, it shall return to the insured the insurance payments completely; in case this requirement is dealing with the insured’s violation of insurance regulations, the insurer shall return the insurance payments for the remained term of the agreement by deducting its expenses.

The regulations for returning insurance payments shall be indicated in the insurance regulations, in cases specified in the first and second paragraphs of this item.

4. In case the insurance agreement is terminated due to the death of the insured, the insurer shall return to the legal heir of the insured the insurance payments for the rest part of the agreement term.

1. The insurance agreement shall be considered to be invalid from the date of its signing together with the general basis of invalidity of transactions taken into consideration by the Civil Code in the following cases:

1. Insurance premiums on compulsory types of insurance and tariffs shall be determined in accordance with the law, however on other types of insurance they shall be identified by the insurer.

2. In necessary cases the relevant body of Executive authorities may determine the minimum insurance tariffs to stop the unjust competition

3. The insurance premiums paid by the insured shall be referred to the prime cost of the output (works, services).

1. The insurer shall pay the insurance premium according to the application of the insured or based on the official investigation of the insurance accident, in accordance with the law.

The insurer or his authorized person (expert) shall compile the official survey. The insurer shall have the right to identify the reasons of the insurance accident and the details.

2. Establishments, departments, institutions and legal protection bodies shall have to submit necessary information concerning the insurance accident, based on the insurer’s requirement.

3. Tax or levies shall not be deducted from insurance premiums.

1. The followings shall be the basis for insurer’ refusal from payment of insurance premiums:

2. In case the insurance amount is less than the insurance value of the property, except otherwise provided in the agreement, the insurance premium shall be decreased in proportion of the insurance amount to the insurance value of the property.

3. Other basis, not contradicting the law, for refusal from payment of insurance premium may be indicated in the terms of the insurance agreement.

4. The decision on refusal of payment of insurance premium shall be submitted to the insured in written and the reasons for the rejection shall be indicated in it.

5. The insured shall have the right to run to the law in connection with the refusal of the insurer from payment of insurance premium.

In case insurance amount on life insurance, on condition that the insured will live up to certain age or die, is not required by the insured or his legal heir within 10 (ten) years after expiry of the payment term, it shall be transferred to the state budget after ending of the tenth year by submitting the list of the insured to the relevant body of Executive authorities.

1. The obligations of the insured shall be the following:

2. Other obligations of the insured may be specified in the insurance agreement as well.

1. Insurer shall:

2. Insurer’s other obligations may be specified in the insurance agreement as well.

3. The insurers shall transfer to the special account of the relevant body of Executive authorities each quarter funds in amount of 1 per cent of the profit remained under their disposal after tax payment.

4. The insurer signed a repeated insurance agreement shall bear full responsibility for its commitments before the insured. The repeated insurer shall bear responsibility for its commitments before the insurer.

The repeated insurance agreement shall become invalid at the same time with the agreement signed between the insurer and the insured.

5. The insurer operating in the territory of the Azerbaijan Republic shall have the right to accept for repeated insurance only the risks on licensed insurance type.

6. The amount of share of risks on obligatory insurance types introduced for repeated insurance to be left under the authority of the insurers operating in the Azerbaijan Republic and the procedure of its leaving shall be determined by the law.

7. On risk reinsurance for voluntary insurance types the insurer must retain as a minimum 15 percent of insurance payments per one agreement (as a minimum 5 percent under fronting agreements) on condition that the risk amount will correspond to the norm determined in subparagraph 1.2 of clause 46 of current Law.

8. A reinsurer has the right to reinsure with foreign reinsurers part of his assumed risk exceeding 50 percent of minimum amount of authorized capital established by legislation.

9. If the amount of risk accepted under one agreement is lesser than 50 percent of minimum amount of the authorized capital of insurers functioning in the Azerbaijan Republic then part of reinsurance payments not exceeding 70 percent for such risks may be paid to foreign reinsurers.

10. Brokerage premiums under proportional reinsurance agreements concluded with the foreign reinsurer shall not be less than 10 percent of calculated insurance payment.

11. Item 10 of current clause is not applied to insurers who closed a bargain with foreign reinsurers with the rating determined by appropriate executive body from ratings determined by the international rating organizations or exceeding indicated rating.

1. In case the insured that signed a property insurance agreement dies, his rights and obligations shall pass to the person who accepts this property in order of inheritance.

In case the property - the insurance facility sold, changed, presented, leased the right and obligations of the insured shall pass with the insurer’s consent to the person accepting that property by his consent, if other terms are not provided in the agreement or the law.

2 In case the insured that signed a life insurance agreement for the benefit of the third person dies, his rights and obligations shall pass to the third person by the consent of that person. In case this person can not fulfil the obligations on the insurance agreement, his rights and obligations may pass to the persons carrying out the obligations on protecting his rights and interests, in accordance with the law of the Azerbaijan Republic.

3. In case the insured was considered by the court a person not having capacity for work, during the time of validity of the agreement or his capacity for work is limited, the rights and obligations of such insured shall be carried out by his trustee or sponsor. In this case the civil property insurance ends from the date the insured was considered to be a person having not capacity for work or with limited capacity for work.

4. In case the insured legal entity is established again at the time the agreement is in force, its rights and obligations on this agreement shall pass to its relevant legal heir pursuant to the law.

5. The person intending to be insured shall have the right to appoint any physical person or legal entity to receive the insurance payment, as well as to change them by the consent of the insurer before the insurance accident takes place.

1. The right (claim) of requirement of the insured for the culprit to pay the compensation for the caused damage shall pass to the insurer that made the insurance payment on property insurance in the way of regress within the amount of the insurance payment made by him.

In case the insured receive the insurance premium all the necessary documents he has shall be submitted to the insurer to implement the specified right.

2. In case the insured refuse from the claim to the culprit or the rights ensuring this requirement or from submitting necessary documents to the insurer, the insurer shall be exempted from insurance payment in the amount of the sum that can be received from the culprit in the form of regress.

3. The insured may compromise the insurer the right of requirement to the culprit to pay the compensation of the damage more than the amount of the insurance premium.

1. The insurance facilities shall be:

• The life, health, working ability the insured;
• property;
• property interests not contradicting to the law related to the responsibility for damage caused to other persons.

2. Insurance shall consist of two fields – life and non-life insurance fields.

3. Insurers may also carry out operations either in life and non-life insurance fields or on only one of these fields.

4. Types of insurance may be implemented both voluntarily or compulsory. The terms of life and non-life insurance and procedure of implementation of insurance shall be specified in the agreement between the insurer and insured in accordance with the law.

Terms of compulsory insurance and procedure of its implementation shall be determined by laws of the Azerbaijan Republic.

Except otherwise provided in the law, the allocations for carrying out operations on compulsory insurance types shall be determined in amount of ten per cent.

5. Insurance types in the fields of life and non-life insurance, except otherwise provided in the law, shall be carried out compulsorily by all insurers with special license, irrespective of organizational and legal and property forms.

The basis of financial stability shall consist of its paid authorized capital, special guarantee, normative documents ensuring payment capacity, reserve stock, as well as the repeated insurance system.

1. The insurance premium entered to the repeated insurance in the field of disease and individual accident insurance field referred to non-life, as well as life insurance, by charged insurance premiums, shall be kept as a special guarantee in amount of minimum percentage determined by the relevant body of Executive authorities, providing not to be more than their 10 per cent.

2. A special guarantee indicated to the newly founded insurers shall be fixed in amount of 10 per cent of the insurer’s paid authorized capital until it reaches the minimum amount determined by the relevant body of Executive authority.

3. The special insurance guarantee of the insurer shall not be less than 10 per cent of the authorized capital paid in all cases.

4. A relevant body of Executive authorities shall determine the procedure of establishment of a special guarantee with the aim to carry out the life insurance agreement commitments and the terms.

1. The insurer shall not be allowed to give an instruction on the money resources (Azerbaijan manat, foreign currency) kept as a special guarantee and the movable property without a permission of the relevant body of Executive authorities of the Azerbaijan Republic.

2. A permission shall be required for replacement of valuables forbidden for free usage as special guarantee with such other valuables of the same price. In this case the prices valid at the date of implementation of the replacement operation shall be taken as the basis.

3. The relevant body of Executive authorities may require to value anew the assets kept as special guarantee, to complete their insufficient part and to change the unimportant property among these assets with other property.

4. In case the special guarantee of the insurer is not sufficient the interest, dividends and other such incomes gained from the valuables forbidden for use shall be directed to the completion of the special guarantee.

5. Free use of the part of special guarantee exceeding the amount required in accordance with Article 40 of this Law shall not be forbidden.

6. The insurers shall develop for the first time proposals on the terms and procedure for establishing the special guarantee within 15 days after the date of start for insurance activity and submit them to the relevant body of Executive authorities. The terms and regulations contradicting this Law or caused damage to the insurers’ rights and interests shall be changed by the requirement of the relevant body of Executive authorities.

7. The insurers shall submit information to the relevant body of Executive authorities about the implementation of the requirements put for the special guarantee in accordance with this Law at least within 5 (five) working days from the date of its fulfillment.

1. Special guarantee shall be used in case of abolishment and absence of payment ability, first of all to pay (payment of insurance premiums and returning of insurance premiums for remained period by deducting the spent expenses) the insurance debts of insurers in the relevant insurance field. The surplus resources shall be added to other special guarantees referred to insurance fields.

2. Special guarantees related to the insurance fields, the operation of which stopped by the insurer, shall be used freely after complete payment of all debts in those fields.

1. The following valuables can be kept as special guarantee:

2. The value of immovable property shall not be more than half of the total amount of special guarantee.

1. Insurers shall establish reserve stock from the insurance premiums before tax deduction in accordance with this Law to ensure the stability of their activity.

2. Insurers shall establish reserve stock for fifteen year term on the account of the remained insurance amount of allocations that made from the insurance premiums charged on fire and engineering insurance types to against the commitment for payment of the damage caused as a result of earthquake that may take place, by deducting insurance premiums actually paid for repeated insurance, the expenses for brokerage premiums and prevention of an insurance accident. The relevant body of Executive authorities shall determine the establishment of this reserve, including the procedure of calculation of the allocations.

3. Insurers shall establish a reserve for payment of high level losses to provide the implementation of agreement commitments against high rate risks in all types of insurance, except long-term (more than one year) life insurance and earthquake insurance.

This reserve shall be calculated in the manner specified by the relevant body of Executive authorities, based on actually paid and (or) calculated insurance payments for previous periods under review.

4. The reserve stock on current risks shall consist of the part of the remained resources calculated on the basis of days or months past to the period under review, after deduction of insurance premiums paid for repeated insurance from insurance premiums and the operational costs and expenses for overcoming the insurance accident, pursuant to the effective agreements.

In case the calculation of the reserve stock on current risks based on insurance agreements is not possible from technical standpoint, this reserve shall be established on the account of the allocations in amount of minimum 25 per cent in the transport insurance and in amount of minimum 33, 5 per cent in other types of insurance made from the part of the entered insurance premiums remained at the end of each reviewing period.

5. Insurers operating in the field of life insurance shall establish mathematic reserve based on general actuary calculations in the manner specified by the relevant body of the Executive authorities.

6. Reserve stock shall be calculated at the exchange rate on the date of calculation in currency indicated in the commitments of the agreement. In case the currency of the insurance premium received by the insurer differs from the currency expressed in its commitments, the insurer may purchase the currency specified in the commitment with the aim to establish the reserve stock.

7. Insurer before payment of tax may establish fund of measures on overcoming the insurance accident and the brokerage premiums in the amount and manner identified by the relevant Executive authority.

8. Insurer may establish other reserve stocks and funds after tax payment.

9. Special ensuring is a component part of insurance reserves.

1. The reserve stock specified by this Law shall be considered for the implementation of the insurer’s commitments on the agreement.

2. The resources of the reserve stock may be placed (invested) in the following manner by the insurer’s wish:

3. Keeping more than 40 per cent of the total reserve stock in one bank or credit institution shall not be allowed.

4. The value of immovable property and lands in which invested reserve stock shall be accepted in amount of 80 per cent of their market price.

1. The insurer shall observe the following standards to ensure his paying capacity

2. The insurers own funds shall consist of the difference between his assets and the amount of the agreement liabilities. In this case, while calculating the assets, the actual insurance payment amount shall not be taken into account.

3. The insurer shall observe the standards specified in this Article by completing his assets, introducing the relevant part of liabilities to repeated insurance or decreasing of insurance operations.

4. The amount of insurer's funds shall not be less than the amount of minimum authorized capital established by legislation.

In case of the insurer’s bankruptcy one or several other insurers acknowledge that they accept his life insurance portfolio together with its all rights and liabilities, this insurance portfolio may be assigned to other insurers by the consent of the relevant body of Executive authorities before completion of the procedure on announcement of insurer’s bankruptcy or abolishment.

Special guarantee and relevant reserve stock may be assigned together with the life insurance portfolio of the insurer who became bankrupt or the insurer accepting the insurance portfolio shall establish them.

1. Re-establishment of the insurer in any form (combining, joining, division, parting, and transformation) and partial or complete assignment of the insurance portfolio to another insurer in this respect shall be carried out by the consent of the relevant body of Executive authorities.

2. The agreement on assignment of insurance portfolio to another insurer shall not include the terms causing damage to the rights and interests of insurers.

3. The insurance agreements, reserve stocks assigned together with the insurance portfolio, the terms related to the profits to be gained from investment and special guaranties, as well as the date of issue of the portfolio shall be exactly indicated in the agreement on assigning of insurance portfolio.

4. Re-establishment, abolishment and assignment of the insurance portfolio to another insurer in this connection shall be announced in republic’s media during one week at least twice by intervals. In case the insureds do not express objection within three months after the date of announcement, the assignment of the insurance portfolio shall be considered accepted by them.

5. The commitments of the insurer assigning the insurance portfolio to another one, in accordance with this Law, shall be terminated after giving the insurance resources in total amount by a special guarantee.

6. Any forms of re-establishment of the insurer, assignment of portfolio to another insure, information about lifting of the special license shall be announced in the republic’s media by the relevant body of Executive authorities.

1. Insurance control with the aim to protect the rights and interests of the insured, insurers and other participants of insurance market, as well as the state and to ensure the observation of requirements of the insurance law in the Azerbaijan Republic shall be carried out by the relevant body of Executive authorities.

The relevant body of Executive authorities shall operate in accordance with the regulations approved by the relevant body of Executive authorities of the Azerbaijan Republic.

2. Main obligations of the relevant body of the Executive authorities shall be the following:

The rights of the relevant body of Executive authorities regarding insurance control shall be the following:

1. In case the standards of special guarantee of insurer’s financial stability is followed or in case the its non-ability of implementation of its agreement commitments or the financial condition become worth to the level that can cause danger the rights and interests of the insured, the relevant body of Executive authority may require the same insurer, by giving some time, to carry out the following measures:

2. The management of the insurer or the founders shall deliver to the relevant body of Executive authority information about the implementation of measures specified in item 1 of this Article in the form of monthly report.

3. In case of impossibility of improvement of the financial condition of the insurer, in spite of implementation of measures considered in item 1 of this Article, the relevant body of Executive authorities shall have the following rights:

1. The relevant body of Executive authorities shall carry out measures to overcome monopolizing activity and wrong competition regarding insurance, restriction and elimination of such activity, in accordance with the law.

2. The relevant body of Executive authorities shall give its consent, in accordance with terms of the law on monopoly, to one legal entity or physical person or a group of legal entities and physical persons related to one another based on an agreement or the legal entities in the form of sister company or under dependent relations to purchase more than 20 per cent of insurer’s authorized capital as a result of one or several transactions (except the cases the founders paid the insurer’s authorized capital).

1. The insurers and brokers shall carry out statistical accounting and book records on financial and economic activity and deliver reports, in accordance with the procedure specified by the law.

2. The record documentation and financial statements shall reflect the operations financial condition of its branches jointly. While drawing up the quarterly and annual statements the insurers and brokers shall submit general accounting balance by taking into consideration the reports of the insurer’s branches and their financial results.

3. Normative legislative documents shall determine the procedure for drawing up insurer’s reports on financial stability and paying capacity and development of other information and submission to the relevant body of Executive authorities.

1. The independent auditor appointed by the insurer shall audit its financial and economical condition.

The statement on annual financial and economical activity approved by the auditor shall be submitted to the relevant body of the Executive authorities and published in media.

2. The relevant body of the Executive authorities shall control over the insurer’s activity in accordance with this Law.

Insurers, brokers and other professional participants of insurance market shall bear the responsibility specified by the law for violation of this Law and other legislative documents regarding insurance issues.

Disputes arising on insurance are solved in accordance with theprocedure established by the Azerbaijan Republic's legislation, including judicially.

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Non-official translation