There are a number of risks that will impact the financial status of the insurance companies and if not managed properly, would eventually lead to financial problems and bankruptcy. Solvency of an insurer is contingent upon the internal risk management. Thus, if an insurance company could not meet its liabilities, the bankruptcy would incur losses for the policyholders and beneficiaries. Further, the insurers’ bankruptcy may have greater impact on the market and the protection mechanisms will be effective for developing the public trust and the insurance industry reputation.
Given the significance of this issue, Energy Insurance Desk of IRC has recently published a research report namely “Various Types of Mechanisms for Protecting Policyholders in Iran and other Countries”.
Written by Fatemeh Atatalab, IRC’s associate researcher, the report reviews the protection mechanisms in 43 countries including solvency, deposit capital for establishment, investment regulations, policyholder protection regulations, and the funds and schemes for protecting the policyholders. It also examines the protection mechanisms in Iran and compares them with those employed in other countries.
The study findings show that the developed mechanisms in Iran are on a par with those utilized in other countries. All the bylaws issued by the High Insurance Council are formulated based on an insured protection in mind and the general terms and conditions are equal in all the insurance lines. The latter can be further considered as a kind of policyholder protection per se. In fact, these mechanisms are monitored since the establishment of a company and its purpose is securing the safety of an insurance company and thus, protecting the insureds. According to the Establishment Law of Central Insurance of I.R. Iran and Compulsory TPL Law 2015, if an insurer violates such mechanisms, its activity license will be suspended and its assets will be transferred to the institutes introduced in the law and the insolvency will be tackled accordingly. The untapped issue in this regulation is what if the assets do not suffice covering all the losses incurred to the policyholders. The study proposes a solution for that.
If interested to download and read the Persian full text of the aforementioned research report, you can access it by clicking on the following link: http://www.irc.ac.ir/fa-IR/Irc/4946/Articles/view/14643/1489.