Azerbaijan to introduce unemployment insurance for credit risks

Azerbaijan is set to implement a new insurance product designed to cover credit risks stemming from unemployment. According to economist and deputy Vugar Bayramov, the Central Bank has already prepared regulations for this initiative, which is expected to be implemented shortly.

Under the proposed rules, if a borrower loses their job due to circumstances beyond their control, such as company closure or staff reductions, an insurance company will cover part or all of the outstanding debt. This mechanism aims to provide financial protection for citizens while reducing risk for banking institutions.

The new insurance type will apply to individuals employed under valid labor contracts in accordance with unemployment insurance laws. While the insurance may be mandatory for certain types of loans, it is expected to remain voluntary for consumers taking out consumer credits, allowing them the freedom to choose.