Economy, Business And Markets

Insurers Mobilize to Reduce Road Mishaps

Insurers Mobilize to Reduce Road Mishaps
Insurers Mobilize to Reduce Road Mishaps

Local insurance companies have mobilized to help reduce road accidents and thus reduce their mounting losses due to the increase in the number of claims by policy holders, the head of Iran Insurer’s Syndicate said Sunday.

Road mishaps kill almost 17,000 people and injure 200,000 every year and impose huge economic loss. However, the ceiling set by the government for third party auto insurance premiums being inconsistent with the blood money rates has resulted in monumental losses for insurance firms, Ali Akbar Olia, head of the syndicate was quoted as saying by the official website of the Ministry of Road and Urban Development.

“This has prompted insurance companies to launch awareness-raising campaign with their own expense to shed light on the facts and contribute to reducing the deaths  and injuries caused by road accidents,” Olia said.

Launching air ambulance services is another initiative launched by the insurance companies. Such services cost 100 million rials per hour which is fully shouldered by insurers themselves, he added.

He regretted that the government had failed to reduce traffic accidents by 10% each year as required by law. “The minister of road has called on insurers to cooperate with the relevant road safety offices to reduce road casualties.”

Parallel to the awareness-raising campaigns by local insurers, the syndicate has also submitted several proposals to the government and Parliament to amend regulations on third party automobile insurance premium rates. As the current regulations will expire by the end of the current Iranian year on March 20, 2016, the revised rules should address the shortfalls, he said.

Blood money (Diyya) in Islamic Sharia law is the financial compensation paid to the victim or their next-of kin in cases of homicide, bodily harm or property damage. For the current Iranian year (started March 21), the blood money is 1.65 billion rials ($55,000).

Third-party insurance accounts for a large part of Iran’s non-life insurance sector and is considered the main source of income for insurance companies.

However, inconsistent growth in premiums for this insurance scheme with the rate of blood money has undermined the income balance of insurance firms, which has worsened due to the high rate of road accidents.

Iran’s life insurance sector is in its infancy and significantly smaller than the non-life insurance sector, a trend observers say will continue over the long term.