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Insurance terms

insurance

insurance - a system of relations based on the transfer or distribution of risk in the field of protection of the property, life, health, civil liability of the insured or the insured, as well as activities not prohibited by legislation, including the protection of property interests related to entrepreneurial activity

reinsurance

reinsurance - a system of relations based on the transfer or distribution of all or part of the risks insured by the insurer under the insurance contract in accordance with the contract concluded with the reinsurer

insurer

Insurer - a local legal entity that has an appropriate license to carry out insurance activities on the basis of this Law, and is a party to the insurance contract, which is obliged to pay the insurance payment in the manner determined by the legislation or the contract in the event of an insurance event provided for in the insurance contract.

reinsurer

reinsurer - a party that reinsures (accepts for reinsurance) risks insured (reinsured) based on insurance or reinsurance contracts concluded by a primary insurer or primary reinsurer with a license for insurance or reinsurance activity

reinsured

reinsured – an insurer or reinsurer who reinsures (transfers to reinsurer) the risks it insures or reinsured on the basis of a reinsurance contract

insurance supervisory authority

insurance control body - the relevant executive power body that performs the functions of state regulation and control in the insurance sector

insurance contract

insurance contract - an agreement that stipulates the conditions for the insurer's obligation to pay the losses, compensation for damage, or the agreed amount of money based on the occurrence of a certain event, in return for the payment of an appropriate insurance premium by the insured

certificate of insurance

insurance certificate - a document issued by the insurer to the insured and (or) the insured, confirming the conclusion of the insurance contract


insured

insured - the party of the insurance contract who pays the insurance premium and has an insurable interest in the insurance of the insured object

insurance risk or risk

Insurance risk or risk – the possibility of the occurrence of an accident that may lead to losses or damages related to the insured object, as well as the obligation undertaken by the insurer against this possibility.

Insurance accident

Insurance accident – an  accident or situation that occurs during the period of validity of an insurance contract, and is the basis for the payment of insurance benefits to the insured, the person being insured, or other beneficiaries, in accordance with the legislation or the insurance contract.

Insurance claim

"Insurance claim – a request made by the insured, the beneficiary, or the policyholder to the insurer to fulfill its obligations in accordance with the law and the insurance contract when an insured event occurs; this concept is referred to as a 'reinsurance claim' in relation to the request made by the reinsured to the reinsurer under reinsurance contracts."

Insurance regulations

Insurance regulations – documents prepared by the insurer itself or in another manner envisaged in the insurance legislation, which establish the rules and conditions for the specific type of voluntary insurance carried out by the insurer in accordance with insurance legislation.

Insured object

Insured object – any lawful interest of the insured or the person being insured.

Insurance premium

Insurance premium – the amount of money that the insured is obligated to pay to the insurer in accordance with the terms specified in the insurance contract, in exchange for accepting or sharing the risks.

Sum insured

Sum insured - the maximum amount expressed in legal regulations or the contract that defines the insurer's liability for insured risks.

Refunded amount

Refunded amount – the amount of money that the insurer is obligated to pay to the insured when the life insurance policy is terminated before its expiration.

Insurance subject

"Insurance subject - a physical person, property, or situation to which the benefits of the insurance contract apply.

Insurance payment

"Insurance payment - the financial compensation paid by the insurer in accordance with the law and the insurance contract when an insurance accident occurs."

Retention limit

Retention limit – the portion of the insurance risk that remains the responsibility of the insurer (reinsurer) according to the insurance or reinsurance contract."

Joint insurance

"Joint insurance - a legal and economic mechanism arising from an agreement among several insurers in which the insurance risks specified in the insurance contract are collectively insured, and the responsibilities for insurance premiums are distributed among them."

life annuity insurance

"Life annuity insurance - a form of life insurance where the regular insurance premiums paid by the policyholder are accumulated with the insurer as periodic annuity payments."

Actuary

"Actuary - a specialist who determines the principles of calculating insurance premiums through economic-mathematical calculations in accordance with regulations, and also calculates insurance reserves."

License

"License - an official document that authorizes an insurer to carry out insurance activities, a reinsurer to engage in reinsurance activities, an insurance broker to conduct insurance brokerage activities, and an insurance agent to perform insurance agent activities."

mandatory capital

"mandatory capital - the amount of funds needed to meet the financial obligations of the insurer in full.

Insurer's own funds

"Insurer's own funds - the funds determined by the insurance supervisory authority based on established rules, which are exempt from the insurer's obligations."

"total capital"

"Total capital - the total amount of funds required to ensure the financial stability and payment capacity of the insurer."

Individual

Individual - a natural person or a legal entity.
Local legal entity - any legal entity established in accordance with the legislation of the Republic of Azerbaijan.

Foreign individual

"Foreign individual - a physical individual who is not a citizen of the Republic of Azerbaijan and does not have a permanent residence in the territory of the Republic of Azerbaijan."

foreign legal entity

foreign legal entity - legal entities not covered by the concept of local legal entity foreign insurer - foreign legal entity that has the right to carry out insurance activities according to the legislation of its country

foreign reinsure

"foreign reinsurer - a foreign legal entity or person who has the legal right to engage in reinsurance activities in their own country based on their local legislation."

Cooperative organization

"Cooperative organization - a legal entity where the main founder (shareholder) with significant control is established for the purposes of the Law of the Republic of Azerbaijan on Insurance Activities."

subsidiary organizations

"subsidiary organizations - legal entities that are under the significant control of one another or each of them is under the significant control of the same third party (individuals)."

Significant contract

"Significant contract - a contract that grants the authority to significantly influence decisions made by a legal entity, regardless of whether any person holds shares in that legal entity, for the purposes of the Law of the Republic of Azerbaijan on Insurance Activities."

Significant control

"Significant control - the ability for a shareholder, for the purposes of the Law of the Republic of Azerbaijan on Insurance Activities, to own 50 percent or more of the ordinary shares of a legal entity, or the significant influence on decisions of a legal entity by any person under a significant contract.

significant participation

significant participation - directly or indirectly owning 20 or more percent of the shares placed in the authorized capital; a person is considered to be the owner of a significant participation in a legal entity when he exercises significant control over another legal entity that has a significant participation in this legal entity

Citizen integrity

Citizen integrity - For individuals envisaged by the Law of the Republic of Azerbaijan on Insurance Activities: no conviction for intentional crimes; no imprisonment for serious or especially serious crimes in the field of property and economic activity; no court decision preventing them from holding the relevant position or engaging in professional activity.

close relatives

close relatives – husband, wife, parents, children, adopted children, sisters, brothers, husband's or wife's parents, sisters, brothers for the purposes of AR Law on Insurance Activity