Iran’s Annual Auto Compensation Hit $3b

Iranian insurers annually pay $3 billion as compensation for traffic collisions which, according to the Central Insurance of Iran, is very high and considered a national loss.   

“In light of the fact that 2% of the Bodily Injury Indemnity Fund’s resources are dedicated to advertisement programs, the fund is expected to devise a plan to assess the main reasons for car accidents and inform people of the proper way of driving and safety factors,” Abdolnasser Hemmati , the CII chief, was quoted as saying by IBENA.

Hemmati also appreciated the fund’s cooperation with insurance companies and CII, noting that new automotive third-party legislations specifically concerned bodily injuries in car accidents.

The legislation, which was approved in November 2015, made it possible for the fund to indemnify third-party policyholders in the event of insurance companies failing to meet their obligations due to either bankruptcy or inadequacy.

The BIIF, originally established in 1969, is affiliated to CII and aims to compensate bodily injury in different insurance sectors. But since third-party insurance was passed into a law in 2015 after a seven-year trial period, BIIF now covers this area as well.  

Hemmati noted that losses incurred in car accidents are very high and “improvements made to safety of vehicles have reduced the death count, however the volume of injuries has increased significantly”.

Iran has one of the highest rates of road accidents in the world. Annually, over 20,000 people are killed and 800,000 people are injured in road crashes, with men comprising 75% of the figure, mostly in the age group of 25-40.

The CII chief referred to incentives that waived penalties for motorcyclists without an insurance policy, saying he believes it to be an effective step to curb the financial and social aftermath of uninsured motorcycle accidents.

“I hope other related entities realize the importance of this issue and join forces to encourage a larger group of people to use insurance policies,” Hemmati said.

Since the extension of the aforementioned incentives, which came into effect on February 19, there has been a 60% increase in third-party motorbike insurance.