Economy, Business And Markets

Mandatory Disaster Insurance Is Law

Mandatory Disaster Insurance Is Law Mandatory Disaster Insurance Is Law

Lawmakers on Tuesday passed a law, requiring all houses to be insured against natural disasters. They also approved a proposal for establishing a special fund specialized for covering losses caused by natural disasters.

The Majlis also tasked the Central Insurance of Iran–the industry' regulator– to open a special account for reinsurance of natural disaster, ISNA reported.

The CII, Disaster Management Organization and Supreme Council of Insurance Industry are bodies charged with the task to calculate the risks and set the price for natural disaster insurance policies. Homeowners can buy supplementary policies if they want a more comprehensive coverage.

As per the new law, insurance companies must also allocate a special account for their natural disaster policies.

Unchallenged Rule

The new law says Iran Insurance Company is the only company allowed to sell natural disaster policy, for now, while other firms should await qualification by the CII based on their capital adequacy performance.

 Iran Insurance Company–the sole state-owned firm-accounted for 39.47% of the premium in the last fiscal year that ended in March. The balance is handled by 30 private insurance firms.

Parliament also tasked the government to increase the Iran Insurance Company's capital by 500 billion rials ($16.49 at the official exchange rate) from the public budget.

From the 20 million residential units in Iran barely 20% are insured against natural disaster, according to the Disaster Management Organization. The figure is expected to reach 50% by next March.

Iran has suffered almost 125 cases of natural disasters over the past 25 years, resulting in 73,000 fatalities, 145,000 injuries, and more than 41 million lives affected. The disasters cost close to $20 billion, according to data published by the CII.