Media laws at Hong Kong
Iran's insurance laws are primarily governed by the Central Insurance of Iran (Bimeh Markazi Iran - CII), which acts as the main regulatory and supervisory body for the country's insurance industry. The CII was established in 1971 to regulate, standardize, and guide the local insurance market.
Here's an overview of key aspects of insurance laws in Iran:
1. Regulatory Authority:
Central Insurance of Iran (CII):
Regulation: The CII is responsible for issuing regulations, establishing standards, and generally overseeing the operations of all insurance companies and intermediaries in Iran.
Licensing and Authorization: It grants licenses to insurance and reinsurance companies to operate in the Iranian market.
Supervision: It supervises the financial solvency, technical reserves, and adherence to regulations by insurance entities.
Market Development: The CII also plays a role in developing and promoting the insurance industry in Iran, including encouraging product diversity and technological advancements like insurtech.
Reinsurance: The CII often acts as a mandatory reinsurer for a portion of direct insurance businesses undertaken by Iranian insurance institutions.
2. Key Legislation and Principles:
Central Insurance Establishment Act and Insurance Practice (1971): This fundamental law outlines the framework for insurance operations in Iran, covering aspects for both domestic and foreign companies.
Civil Code and Commercial Code: General contract principles from these codes also apply to insurance contracts in Iran.
Islamic Law (Sharia): While not exclusively Sharia-based, the Iranian legal system generally incorporates Islamic principles. This influences various aspects, including the increasing interest and development of Takaful (Islamic insurance) products in the market.
Insurable Interest: Similar to many legal systems, the insured must have an insurable interest in the subject matter of the insurance.
Utmost Good Faith: Insurance contracts are typically considered contracts of "utmost good faith," meaning both parties have a duty to disclose all material facts relevant to the risk.
Indemnity: Most non-life insurance policies in Iran operate on the principle of indemnity, aiming to compensate the insured for actual financial loss, not to allow them to profit from a loss.
3. Compulsory Insurances:
Several types of insurance are mandatory in Iran, reflecting social and economic priorities:
Motor Third-Party Liability Insurance: This is compulsory for all car and motorcycle owners in Iran. It covers the policyholder's legal liability for bodily injury or property damage caused to a third party in a traffic accident where the policyholder is at fault.
Workers' Compensation / Social Security Insurance: Mandatory for most employees. The Social Security Organization of Iran (SSO) is the primary body for this, with employers and employees contributing. It covers accidents, diseases, retirement, disability, and death benefits.
Construction Worker's Mandatory Insurance: Specific mandatory insurance for construction workers.
Driver's Mandatory Insurance (Intercity and Suburban): Mandated for intercity cargo and passenger transport drivers, as well as suburban drivers.
Building Manager's Mandatory Insurance: Managers of residential or commercial buildings are required to insure the building against certain accidents, including:
Fire insurance
Elevator liability insurance
Accident insurance inside the building
Accident insurance related to janitors, security guards, or workers
Fire spread insurance to other places.
4. Foreign Investment and Participation:
Iran's strategic goals include absorbing foreign investment and promoting cooperation with foreign insurance companies. The law allows for foreign participation in the insurance sector:
Forms of Participation:
Joint Ventures: Foreign insurance companies can participate with local Iranian insurance companies (with priority to non-governmental sectors) to establish joint commercial insurance companies in Iran.
Capital Absorption: Local insurance companies can absorb foreign capital, including through the transfer of shares to foreign entities.
Branches and Brokers: Establishment and activities of foreign commercial insurance company branches and brokers are permitted.
Communication Offices: Establishment and activities of communication offices.
Ownership Limits:
Transfer of stocks of non-governmental Iranian insurance companies to foreign natural persons or legal entities is possible up to 20% with the agreement of the CII.
Transfer of more than 49% of shares to foreign natural persons or legal entities is generally prohibited in the mainland.
However, in Free Trade-Industrial Zones, 100% foreign ownership in insurance entities may be possible.
Regulatory Requirements: Foreign insurance companies wishing to operate in Iran must observe relevant regulations and meet necessary qualifications set by the CII, including minimum capital requirements.
5. Other Notable Aspects:
Market Structure: The Iranian insurance market consists of a mix of private and one state-owned company (Bimeh Iran Insurance Co.). While the state-owned company historically held a dominant market share, there has been a trend towards privatization and an increase in private sector participation.
Product Diversity: Historically, general insurance (especially auto liability) has dominated the market, with life insurance having a smaller share compared to global averages. However, there's a push for greater product diversity.
E-marketing Rules: The CII has issued rules to regulate and supervise online platforms offering insurance services, ensuring transparency, customer data protection, and clear comparison of products.
Sanctions: It's crucial to acknowledge that international sanctions against Iran can significantly impact the ability of foreign insurance and reinsurance companies to operate in or with Iran, even if Iranian law permits such activities. Companies involved in sanctioned activities may face severe penalties.
For precise and up-to-date legal advice on insurance matters in Iran, especially concerning foreign investment or specific transactions, it is essential to consult with legal professionals specializing in Iranian law and the Iranian regulatory framework.
RELATED Blog
0 comments