A Higher Compulsory Motor Insurance Coefficient for Car Rental? ACRA’s Position and the Chairman’s Comment
ACRA’s position in brief. The Association of Car Rental Companies of Azerbaijan (ACRA) opposes a single surcharge coefficient on compulsory motor insurance for all rental cars. It proposes pricing cover by each company’s real claims history and keeping the existing principle that the surcharge for a specific accident goes to the driver at fault.
What is happening
In April 2026 the Central Bank of the Republic of Azerbaijan announced a 1.5 coefficient for cars working as taxis, introduced by Board Decision No. 44/2 of 16 December 2025. It is the only “purpose of use” coefficient in the premium calculation rules that differs from one. Taxis also have a higher ceiling: their final premium may be no more than five times the base rate, against three times for other cars.
Experts soon suggested in the media that a similar surcharge could follow for rental cars, since many different people drive one rental car over a year. So far this is only a discussion. The current rules set no separate coefficient for rental cars, and ACRA is not aware of any published draft of such a decision.
The pressure on premiums is easy to see. According to Central Bank figures quoted by banker.az, the loss ratio in compulsory motor insurance reached 79.8% in January–August 2026, up from 73.5% for the same period a year earlier and 70.8% in January–August 2024. In other words, almost four-fifths of the premiums collected went on claims, and, by the same data, claims grew roughly twice as fast as premiums.
How a rental car’s insurance is calculated today
A rental car belongs to a company, so its premium follows the rules for legal entities:
- A legal-entity coefficient of 1.40. It has applied since 2022 and is used instead of the driver age-and-experience coefficient that applies to private owners.
- Insurance history is not taken into account. Since June 2026 an insurance history coefficient ranging from 0.6 to 3 has replaced the bonus-malus system. For legal entities other than taxi operators, however, it is fixed at one: a company with no claims gets no discount, and a company with frequent accidents pays no more.
- The at-fault driver carries the surcharge. If a driver causes an accident in a company car that is not used as a taxi, the surcharge goes onto the insurance history of the person who was behind the wheel. Company-owned taxis follow a different rule: a 30% surcharge for each paid claim is applied to the company itself.
Why ACRA opposes a single coefficient
It does not distinguish the careful from the careless. A company with clear procedures for inspections, servicing and driver checks would pay the same as an operator with no office and no rules.
It penalises those who work legally. Unregistered “rental companies” will not become more careful because of a new coefficient. The surcharge would be paid by companies that operate openly and insure every car.
It is not linked to real accident rates. Companies already pay a higher legal-entity coefficient. Another surcharge based solely on the type of business would raise premiums for everyone, regardless of how many accidents a particular fleet has had.
In the end, the customer pays. Insurance costs are part of the rental price. A single coefficient would make every tourist’s or business traveller’s trip more expensive, even for someone who has never had an accident.
What ACRA proposes
- Assess risk by the company’s history. Introduce for rental companies an insurance history coefficient within the same limits as for private individuals, but calculate it from the frequency of claims per car. That puts large and small fleets on an equal footing: a claim-free fleet earns a discount, an accident-prone one pays more.
- Keep the “at-fault driver pays” principle. The surcharge for a specific accident should continue to fall on the driver who caused it, while the company coefficient reflects the fleet’s overall accident rate. A rental contract names the driver, so the person at fault is easy to identify.
- Recognise verified standards. Members of the ACRA White List pass an independent audit against 8 criteria, including an inspection report with photos at every handover, CDW and TPL insurance on every car, and scheduled fleet maintenance. A clean record combined with verified standards should qualify for a discount.
- Decide on the basis of data. Before any change to rental premiums, loss statistics for this specific segment should be published. The Central Bank’s April progress report on the Financial Sector Development Strategy 2024–2026 refers to the preparation of a concept for risk-based insurance tariffs, and that is exactly the approach ACRA supports.
How rental companies already manage risk
Rental fleets do not all carry the same accident risk; it depends on how a company looks after its cars and its customers. White List members must follow the common rules of the charter, and many go further. At Karavan Rent A Car in Baku, for instance, cars are serviced every 5,000 km, tyres are replaced every 50,000 km, and drivers must be at least 21 with a year’s experience, with those aged 21–23 required to take the “All Risks Zero” package.
These are exactly the differences a single coefficient cannot see and an insurance history coefficient can: careful fleet management gradually turns into a lower premium.
Comment for the media from the ACRA chairman
“We are not against insurance reflecting risk. We are against an honest rental company paying for those who work without an inspection report and without insurance.
A single coefficient is a simple solution, but it punishes everyone equally. The market already has a tool that tells the careful from the careless: insurance history. We propose applying it to rental companies too, and keeping the rule that whoever causes an accident pays for it.
We are open to a conversation with the regulator and insurers — in the language of data, not market averages.”
Questions and answers for rental customers
Will car rental become more expensive because of the new insurance rules?
The rules in force today contain no separate surcharge for rental cars. Rental prices are set by each company on its own; ACRA does not coordinate them.
Does the compulsory policy apply when the renter is driving?
Yes. Under the Law on Compulsory Insurance, the policy covers anyone lawfully driving the car, so a customer named in the contract is insured under the compulsory policy.
Will an accident in a rental car affect my own insurance history?
Yes, if you caused it: the surcharge goes onto your personal insurance history. If you own a car in Azerbaijan, this will be reflected in the price of its policy.
About ACRA
The Association of Car Rental Companies of Azerbaijan (ACRA) is the country’s first professional body for rental companies, founded in 2026. Its members work under a common charter. Companies that pass the audit are listed on the public White List: breaching the charter brings a warning, and a repeat breach means removal from the list. The association is chaired by Karavan Rent A Car in Baku.
Media enquiries: mail@karavan.az
