Motor insurance is being squeezed
Over seven months this year, premiums written in Azerbaijan’s voluntary motor insurance grew 1.2 percent while claims paid grew 28.7 percent. The loss ratio reached 54.8 percent, leaving a band it had held for eight years. What that means separately for an insurer, a car owner and a bank writing auto loans is set out below.
Loss ratio here means claims paid divided by premiums written in the same period. It is a crude measure with no reserves, no incurred-but-not-reported claims and no expenses in it. The Central Bank itself marks the table as provisional.
The book is not growing. What flows out of it is. Those two lines are the whole study.
| Measure | 2025 | 2026 | Change |
|---|---|---|---|
| Premiums written | 40,442 | 40,936 | +1.2% |
| Claims paid | 17,442 | 22,451 | +28.7% |
| Loss ratio | 43.1% | 54.8% | +11.7 pts |
Had 2025’s ratio held, the sector would have paid 4,796 thousand manat less over seven months. For scale, the entire national KASKO pool in 2025 was 78,626 thousand manat.
From 2018 to 2025 the January to July loss ratio stayed between 31.6 and 43.1 percent and never once left it. Calling 2026 unprecedented would be wrong, because 2017 came in at 53.8percent. But the book then was a third of today’s size, 12,230 thousand manat against 40,936.
The tariff reform applied from 16 June 2026. Split the cumulative figure into months and the deterioration appears well before that. February separates by nearly a factor of two.
The whole market’s loss ratio rose from 56.4 to 66.7 percent this year, which reads like a sector in trouble. Almost all of that rise comes from one class. Life endowment is a savings product, and its payouts are contracts maturing rather than losses. Strip it out and the picture changes.
| Class | 2025 | 2026 |
|---|---|---|
| Whole market | 56.4% | 66.7% |
| Life endowment | 82.6% | 96.1% |
| Market excluding life endowment | 32.6% | 36.5% |
| Voluntary non-life | 31.2% | 29.4% |
| KASKO | 43.1% | 54.8% |
Note that voluntary non-life has actually improved. The problem is not everywhere in the market. It is in motor.
Compulsory motor liability runs at 81.3 percent, which is high but not unusual: 2022 came in at 86.0. What separates this line from the voluntary one is the absence of a pricing instrument. The law forbids applying any discount or surcharge to a compulsory premium, forbids refusing to write the contract, and leaves the tariff to the regulator.
| Year | Premiums | Claims | Loss ratio |
|---|---|---|---|
| 2021 | 56,558 | 38,422 | 67.9% |
| 2022 | 59,150 | 50,846 | 86.0% |
| 2023 | 92,644 | 56,655 | 61.2% |
| 2024 | 95,962 | 67,439 | 70.3% |
| 2025 | 101,795 | 75,427 | 74.1% |
| 2026 | 111,394 | 90,514 | 81.3% |
Between January and July, premiums written moved from 40,442 to 40,936 thousand manat, a little over one percent. Claims paid moved from 17,442 to 22,451, twenty-nine percent. When a product's cost rises and its price does not, the answer lies either in how it is priced or in who is buying it.
For eight years the ratio held inside a narrow range, which is what working pricing looks like: an expensive year was followed by a cheap one and the average held. 2026 is the first year that balance broke. For comparison, 2017 was also high, but the book then was a third of today's, small enough that a handful of large claims could move the whole year.
In the monthly split, February rises from 37.9 to 68.7, while the tariff reform applied four months later on 16 June. The sequence says the reform did not start the deterioration. What the reform did to the months after it is a separate question that this data cannot answer.
The market's headline ratio rose ten points this year, and almost all of that comes from life endowment. There the figure reached 96.1, because savings contracts are maturing and the money is going back to the holder. Counting that in the same table as claims distorts the picture. Strip it out and the market sits at 36.5 percent, with voluntary non-life improving.
Compulsory motor liability runs at 81.3 percent. That is high, but 2022 came in at 86.0, so it is not a jump. What separates this line from the voluntary one is that the insurer holds no pricing instrument. The law forbids applying any discount or surcharge to a compulsory premium, forbids refusing to write the contract, and leaves the tariff to the regulator.
What you can act on tomorrow morning depends on who is reading.
The market number is not your number, but the question is the same.
Context for why the price may move.
The insurance sitting behind your auto-loan book is getting more expensive.
We do not forecast prices, but we can put a number on the pressure. Over January to July 2026 premiums written in voluntary motor insurance grew one percent while claims paid grew twenty-nine, taking the loss ratio to 54.8 percent. That is the highest since 2017 and outside the 31.6 to 43.1 band that held for eight straight years. When a book tightens like this an insurer usually has three moves: raise the tariff, tighten the terms, or manage the claims better.
The loss ratio in voluntary motor insurance was 43.1 percent over the same months of 2025 and reached 54.8 percent in 2026. The move is not driven by sales stalling but by claims accelerating, since premiums barely grew. The figures come from the Central Bank's monthly series going back to 2017.
Claims paid divided by premiums written in the same period. It is a crude measure with no reserves, no incurred-but-not-reported claims and no expenses in it. The Central Bank itself marks the table as provisional.
The Central Bank's Table 6.2, premiums and claims by insurance class. The workbook carries the monthly series back to 2017, and every figure here was recomputed from it.
Public data cannot answer that. The Central Bank publishes company totals in one table and class totals in another, and no file crosses the two. No company is named here for that reason.
We do not know. The State Statistical Committee's road-accident series ends in 2024, where the fall from 2023 was 1.9 percent. No public figure covers 2026, so we make no claim about it.
This page is the market view, built from public data. At company level the same question cannot be answered from public sources, because the cut that would answer it is not published. With your own data it becomes tractable: which part of the book the losses came from, which cohort turned expensive, and where price fell behind. A short call is enough to say where it makes sense to start.