Majid Moshalchi, the deputy chief of the Central Insurance company of Iran (CII), the industry regulator, has disclosed details about ten major brokers and agents with major debts to the insurance sector as of March.
According to Moshalchi, the ten, including the two major carmakers, account for approximately 80% of the total debt within the sales network with a 100,000 payroll, Risknews website reported.
"The CII, as the regulatory body, will make every effort to quickly collect the [unpaid] premiums and enforce the law against those in breach," he said.
"Insurance companies resorted to legal means, including suspending policy issuance and enforcing guarantees, to collect the debt from the sales network”.
He revealed that in sum 211 brokers and agencies owe an estimated 22 trillion rials ($43.1 million) to insurance companies. He concurred that the “amount may not be significant compared to the debts of other industries.”
Per law, representatives are obligated to provide the necessary guarantees to the contracting insurance company to secure the rights and claims of policyholders, insured parties, other relevant sides and the insurer.
The type and extent of guarantees, proportional to the activities of each real or legal representative, and their type of registration, are determined by the contracting insurance company.
Moreover, brokers and agents are obliged to deposit the received insurance premium, either by check or e-payment, into the relevant insurance company's bank account before the end of the working day on which it was received. In some cases it can be delivered to the company's safe.
However, the reason why insurance companies prefer leniency toward their representatives is another issue.
The three top debtors to insurance companies are affiliated to Iran's two main car companies, namely Saipa and Iran Khodro. The list includes brokers and individual agents of private companies.
Brokers affiliated to carmakers reportedly refuse to pay what they owe to insurance companies despite the fact that they charge car buyers in advance for the insurance and even before the car is delivered.
Third party vehicle insurance is mandatory in Iran. It is essentially a form of liability insurance according to which, in the case of accident, the insurer is required to compensate the inflicted party for physical or financial loss according to the reimbursement ceiling set by the High Council of Insurance, affiliated to the CII.
Insurance policy is bought by the insured (first party), from an insurer (second party) for protection against claims by another (third party).
The number of insurance agents reached 77,200 in March 2020, according to the CII. General insurance agents accounted for 37,950 of the total. The number of life insurance agents grew by 13.6% to 39,300. Total branches of insurance firms across the country reached 1,317 in the last calendar year, up 4.2% y/y. The number of brokers grew 16% to 652.
