The Central Insurance company of Iran, the industry regulator, has increased the premium for compulsory third-party auto insurance by 37% for the next fiscal year (starts March 21), following the rise in blood money (Diya) for the upcoming year.
Gholamreza Soleimani, the CII head, made the announcement, adding that the higher rate is still 8.5% lower than the 45.5% rise in blood money for next 12 months set at 4.8 billion rials by the judiciary, IRNA quoted him as saying.
"Insurance companies had demanded 18% increase in the auto premium rates. However, given the decline in traffic, and by extension, in the number of car accidents, we decided to reject the insurers' demand."
Blood money in Islamic Sharia law is the financial compensation paid to claimants or their next-of kin in cases of homicide, body harm or property damage. Third-party auto premium is also calculated based on the blood money for a single person, which for the current Iranian year is 3.3 billion rials.
Third-party vehicle insurance is mandatory in Iran and car owners lacking this policy are fined. It essentially is a form of liability insurance according to which, in the case of road accident, the insurer is required to compensate the harmed party for physical or financial loss according to the reimbursement ceiling set by the High Council of Insurance, affiliated to the CII.
An insurance policy is bought by the insured (first-party), from an insurer (second party) for protection against claims by another (third party).
Car owners unable to afford the high and rising coverage buy car insurance policy in installments to avoid prosecution.
Compulsory third-party vehicle insurance accounted for one-third or 21.8 million policies sold in the first eleven months of the current fiscal year.
Insurers earned 724.5 trillion rials ($2.95 billion) in premium up 36.8% compared to the corresponding period last year. Third-party vehicle insurance alone generated 238 trillion rials ($971 million) or 32.9% of the total, 32.7% higher than the previous year.
