Central bank approves changes to criteria for systemically important insurers

04-09-2026

4 September 2026, Baku: The Central Bank has approved changes to the ‘Criteria for assessing an insurer as a systemically important insurer’ used to identify insurers whose failure or disruption could have a significant impact on the insurance sector, the broader financial system or the economy

The revised framework evaluates insurers on three factors - size, diversification and substitutability and considers their systemic importance at three levels:

• insurance system
• financial system
• broader economy.

The changes are intended to provide a fuller picture of how insurers could affect the financial system, including through their links to financial markets and the real economy. The main changes include:

• The assessment will now focus on three categories – size, diversification and substitutability, replacing the previous methodology’s four categories. The complexity category has been eliminated, and new indicators and weights have been introduced for the remaining categories.
• Securities turnover has been added as an indicator for the first time.
• For reinsurance activities, the methodology will take into account only reinsurance premiums associated with risks assumed by insurers from within the country. The weight assigned to this indicator has also been increased.
• An insurer with a systemic importance index of 15 percent or more will be classified as systemically important.
• The indicator measuring the number of insurance objects will not apply to reinsurers that engage exclusively in reinsurance activities. Its weight will instead be assigned to another indicator within the same category.
• The list of systemically important insurers will be approved annually by a decision of the Central Bank Management Board no later than September 1.

The revised criteria bring the insurance-sector methodology into line with the systemic-importance framework used by the Central Bank for banks. The changes are intended to create a more consistent approach to identifying systemically important financial institutions.

The approved amendments are available at the link below:

https://e-qanun.az/framework/62466