Part 1 - Bimeh Markazi Iran (Central Insurance of IR Iran)

Section 1- Establishment and Objectives

 

Article 1

For the purpose of regulating, expanding, and guiding insurance operations in Iran and for the guidance of the insurance companies, and the protection of the insured and their beneficiaries and to ensure government supervision of such operations, an organization named Bimeh Markazi Iran (Central Insurance of IR Iran) is hereby established in the form of a joint stock company.

 

Article 2

The capital of Bimeh Markazi Iran (Central Insurance of IR Iran) is IRR 500 million which is divided into 50 registered shares of IRR 10 million each, all of which belong to the government and are non-transferable; an increase in this capital is possible with the approval of the General Assembly. The above sum will be supplied from the reserves of Iran Insurance Company.

 

 

Article 3

The office of Bimeh Markazi Iran (Central Insurance of IR Iran) is located in Tehran, and it can give permit to Iran Insurance Company to have branches or agencies, anywhere they may feel necessary.

 

Article 4

Bimeh Markazi Iran (Central Insurance of IR Iran) will not be bound by Iranian public laws relating to governmental institutions organizations and those formed with government funds, except in such cases where in the relevant law Bimeh Markazi Iran (Central Insurance of IR Iran) has been specifically named; in cases where no provision has been made in this law, then Bimeh Markazi Iran (Central Insurance of IR Iran) will be subject to the Commercial Law.

 

Section 2- Duties and Powers

 

Article 5

Bimeh Markazi Iran (Central Insurance of IR Iran) will have the following duties, responsibilities and powers:

 

a. To prepare by-laws and regulations and issue directives deemed necessary for the promotion and proper execution of insurance operations in Iran, with due regard to the text of this law.
b. To compile necessary information on the operations of all insurance organizations operating in Iran.
c. To effect compulsory reinsurance operations.
d. To effect facultative reinsurance from Iranian and foreign insurance organizations.
e. To cede reinsurance to Iranian and foreign insurance companies whenever it is deemed necessary.
f. To administer the Bodily Injury Indemnity Fund and to prepare the by-laws relating to the mentioned fund specified in Article 10 of the law concerning Compulsory Third Party Liability by Owners of Land Motor Vehicles under the Civil Law, approved in JAN 1969.
g. To guide, to lead, and to supervise insurance companies and to afford protection to such companies with a view to ensuring a sound insurance market; to regulate matters relating to agencies and brokers; supervise reinsurance matters and prevent unfair, deceitful and unsound competition.

 

Note:

Bimeh Markazi Iran (Central Insurance of IR Iran) is obliged to guard and preserve the secrets of those organizations which according to this law, have the right to supervise. It should not put any information obtained by it in implementing this law to other uses but those specified in this law.

 

 

Section 3 - Organs of Central Insurance of Iran

Article 6

Bimeh Markazi Iran (Central Insurance of IR Iran) should have the following organs: a. General Assembly b. High Council of Insurance c. Management Board d. Inspectors

 

Chapter 1 - General Assembly

Article 7

The General Assembly will be composed of the Ministers of Finance, Economy and Labor & Social Services. The Management Board and Inspectors will participate in the meetings of the Assembly without having the right to vote.

 

Article 8

The ordinary General Assembly will be held once a year on the invitation of the President of Central Insurance of Iran , by the end of Shahrivar (September 21).
The extraordinary General Assembly will be held on the invitation of the President of Central Insurance of Iran, or on the proposal of the Members of the General Assembly. At which time the President of Central Insurance of Iran is obliged to issue written invitation within ten days after receiving the proposal for holding of the General Assembly. Invitation will stipulate the agenda of the meeting, day, hour and location of the holding of the meeting.
No subject can be discussed at the ordinary or extraordinary meetings of the General Assembly unless it is expressly included in the agenda of that particular meeting.

 

 Article 9

The duties of General Assembly are as follows: 1. Determination of a general overall policy. 2. Scrutiny of and commenting on the annual report of the President of Central Insurance of Iran. 3. Study and approval of the budget, balance sheet and profit & loss account, and arrangement for allocation of profits and dividends. 4. Approval of the administrative organization and of the financial and administrative by-laws of Central Insurance of Iran. 5. Approval of the employment and personnel regulations with due observance of Section C of Article 2 of the State Employment law. 6. Election of Inspectors. 7. Determination of the salaries of the President and Members of the Board of Management and the fees of inspectors. 8. To make decisions on any subject which has been included in the agenda by the Chairman of Central Insurance of Iran.

 

Chapter 2 - High Council of Insurance

Article 10

The High Council of Insurance will have the following persons as members: 1. President of Central Insurance of Iran. 2. Deputy Minister of Economic Affairs & Finance 3. Deputy Minister of Commerce 4. Deputy Minister of Labor & Social Affairs 5. Deputy Minister of Jihad Keshavarzi (Agriculture) 6. Managing Director of Iran Insurance Company 7. Managing Director of one of Insurers chosen by Iranian Insurers Syndicate 8. One expert in legal affairs, elected by General Assembly 9. One expert in insurance affairs, elected by General Assembly 10. A person well-informed about insurance affairs chosen by chairman of Iranian Chamber of Commerce (ICC) Note: Members of High Council of Insurance, subject of Sections 7, 8, 9 and 10, will be elected for a period of three years; they can be reelected.

 

 

Article 11

The Chairmanship of High Council of Insurance, without vote, will be vested in the President of Central Insurance of Iran, and in his absence, with his deputy.

 

Article 12

Members of the High Council of Insurance, before starting their duties, should take an oath in General Assembly that they will exercise utmost care and caution in performing their duties in High Council of Insurance, and that all decisions adopted will be in the interests of the country, and that they will preserve the secret matters coming before High Council of Insurance or those becoming available to them.

 

Article 13

The meeting of High Council of Insurance will be held at least once a month on the invitation of the Chairman of High Council of Insurance and in case, four of its members make a request for a meeting in writing, the Chairman should, within one week, invite the members of the High Council of Insurance to attend the meeting.

 

Article 14

The meeting of High Council of Insurance will attain a quorum with the presence of a minimum of six of its members; decisions adopted with a majority of five votes of those present at the meeting will become valid and enforceable. At the time of discussion and voting in respect of an insurance organization in which one of the members of the High Council of Insurance has an interest of any nature, that member should not participate in the voting.

 

Article 15

The minutes of the meetings of High Council of Insurance should be set down in a register and signed by the Chairman of High Council of Insurance, and kept in the offices of Central Insurance of Iran.

 

Article 16

High Council of Insurance should have a Secretariat whose organization will be approved by High Council of Insurance. The head and staff of the Secretariat will be from the staff of Central Insurance of Iran.

 

Article 17

The duties of High Council of Insurance should be as follows:
a. To consider and to comment on the issuance of Establishment permits or cancellation of such permits of insurance organization in accordance with the provisions of this law, and to make due recommendations to General Assembly.
b. To approve the form of the balance sheet to be used by insurance organizations.
c. To specify the various types of insurance transactions, and general conditions to be included in insurance policies, and to supervise reinsurance operations.
d. To determine the rate of commission and insurance premium relating to the various types of direct insurance operations.
e. To approve the necessary by-laws governing work in the field of providing guidance on insurance operations and the activities of insurance companies.
f. To consider and to comment on the report of Central Insurance of Iran regarding the operations and activities of insurance organizations in Iran that should be submitted at least once every six months.
g. To comment on any proposals submitted by the Head of High Council of Insurance.
h. Performance of such other duties as determined for it by this law.

 

Chapter 3 - Management Board

Article 18

The Management Board of Central Insurance of Iran should be composed of the President, Deputy and Vice Presidents.

 

Article 19

The President and Deputy of Central Insurance of Iran will be appointed on the proposal of the Minister of Economic Affairs & Finance and the approval of the Council of Ministers by Imperial Farman (Decree); the Vice Presidents will be appointed on the proposal of the President of Central Insurance of Iran, in concurrence with the Minister of Economic Affairs & Finance, and decree of the Council of Ministers.

 

Article 20

The President and Deputy of the Central Insurance of Iran will be appointed for a period of four years, and they will be eligible for re-appointment.

 

Article 21

The President is the highest executive and administrative position in Central Insurance of Iran.

 

Article 22

The duties and powers of the President are as follows:
a. To supervise the implementation of this law and its related by - laws.
b. To represent Central Insurance of Iran vis-à-vis persons and Governmental or private authorities or organizations, courts and other legal or non-legal authorities with right to delegate his power to settle differences by conciliation and other powers stipulated in Article 62 of the Civil Procedure.
c. To delegate part of his powers as well as right of signature to the Deputy or Vice Presidents or heads of departments and staff members and to determine their duties.
d. To present reports on the state of accounts and affairs of the Central Insurance of Iran to the General Assembly.
e. To present reports on operations and activities of insurance organizations in Iran to the High Council of Insurance.

 

Article 23

In the absence of the President of Central Insurance of Iran, the Deputy should exercise the same duties and powers.

 

Chapter 4 - Inspectors

Article 24

Central Insurance of Iran will have two inspectors with adequate knowledge and experience in insurance operations and accounting; one will be proposed by the Minister of Economic Affairs & Finance and the other by the Minister of Commerce. They will be appointed for one year with the approval of the General Assembly with the right of re-appointment.

 

Article 25

The inspectors will have the right to ask for any information from Central Insurance of Iran, but will not have the right to interfere in the affairs of Central Insurance of Iran.
Investigation of the annual balance sheet will constitute the principal duty of the inspectors. The balance sheet of Central Insurance of Iran will be submitted to the inspectors one month prior to the holding the General Assembly in order that they may prepare their comments and submit their views to General Assembly.

 

Chapter 5 - Miscellaneous Provisions

 

Article 26

The President and other members of the Management Board during their term of office should not accept membership in other commercial companies and organizations, or hold posts in other Governmental or private organizations.
Note: Teaching in universities and higher educational institutions, and accepting non-regular posts or assignments in charitable, social and educational institutions are not subject to the ruling of this Article.

Article 27

Financial documents, valuable and negotiable papers and cheque of the Central Insurance of Iran will be valid with two signatures.

Article 28

The Central Insurance of Iran will be authorized to keep its cash balances in the form of current accounts and/or deposit accounts with Iran Insurance Bank (this bank has been merged with Bank Mellat), or, to use them for advancing and developing functions of Central Insurance of Iran, as it deems appropriate or necessary, in accordance with the approved budget from its capital, reserves and physical damages security fund up to IRR 100,000,000 per year upon approval of management board and in case of any surplus upon approval of the general assembly through any other operation including purchase of stocks and partnership in banks and other companies preserving the right of sale and transfer thereof.

 Article 29

Members of the High Council of Insurance, consultants and administrative members of High Council of Insurance, persons to whom the High Council of Insurance consults in the execution of its duties, the President and other members of the Management Board and inspectors and all the staff of Central Insurance of Iran should not reveal confidential information which they obtain in performing their allotted duties; otherwise they will be liable to the regulations of Article 138 of the General Penal Code.

 

Article 30

Iran Insurance Company will continue to carry out its own operations according to its articles of association with the exception of what, under Sections 1, 2, 3, 6 and 7 of Article 5 of this Law has been included as part of the duties and powers of Central Insurance of Iran.
Government Ministries, Governmental Companies and organizations, municipalities, and any other organizations where majority of the share of capital belongs to the Government or the above management or the said organization, must conclude their insurance requirements with Iran Insurance Company exclusively.
This order should include National Iranian Oil Company, National Iranian Steel Mill, Iran National Airlines, Central Bank of Iran, Bank Melli Iran, Industrial Development and Renovation Organization of Iran, and Agricultural Development Fund, except in cases where the General Assembly of any one of these organizations adopts another decision regarding their insurance.
Note: The Government should, within four months from the date of approval of this law, present the new article of association of the above mentioned company (Iran Insurance Company) to the joint Parliamentary Finance and Employment Committee for approval.

 

Part 2-Insurance Operation (Underwriting)

Section 1- Insurance Organizations

Chapter 1- Generalities

 

Article 31

Insurance operations in Iran will be carried out (with due observance of this law) by Iranian public joint stock companies (registered in accordance with the Commercial Law) all of whose shares are registered shares.
Note1: The operations of foreign insurance organizations should be subject to the provisions of chapter 4 of this Law.
Note2: Determination of what operations should be regarded, as insurance operations will be with the High Council of Insurance.

 

Article 32

The number of shareholders of an Iranian insurance organization must not be less than ten real or legal persons.

 

Article 33

 

Any real or legal person cannot own more than 20 percent of the shares of one Iranian insurance organization. The limit of 20 percent includes shares belonging to first descendants of the owner of the shares.

 

Article 34

Those insurance organizations whose shares does the Government hold or the Allavi Foundation is not subject to Articles 31, 32 and 33.

 

Article 35

Transfer of up to 20 percent of the shares of non-governmental Iranian insurance organizations to legal or real persons of foreign nationality should be subject to consent of Central Insurance of Iran, and transfer of any exceeding percentage should be contingent upon proposal of Central Insurance of Iran and approval of High Council of Insurance and Board of Ministers; in latter case, transfer of dividends belonging to foreign shareholders in each year may not exceed 12% of sum of the capital paid and dividends of the previous years not yet transferred.

Note: Transfer of shares of Iranian insurance organizations to foreign governments or transfer of more than 49% of their shares to foreign real or legal entities are absolutely prohibited. Transfer of shares among foreign shareholders requires prior consent of Central Insurance of Iran.

Article 36

Iranian insurance organizations should be formed with a minimum capital of 100 million IRR, of which 50 percent must be paid up in cash. The rate of deposit intended for each branch of insurance required will be determined in regulations to be prepared by the Central Insurance of Iran, and approved by High Council of Insurance.

Article 37

Registration of any insurance company in Iran will depend on presentation of Establishment permit issued by the Central Insurance of Iran. Similarly, registration of any subsequent changes in the articles of association, amount of capital, and shares of insurance companies which have been registered will depend on presentation of the certificate of approval thereof issued by Central Insurance of Iran.

 

Chapter 2- Issue of Permit

 

Article 38

For undertaking insurance operations in all fields a permit must previously be obtained in accordance with the regulations of this chapter, from Central Insurance of Iran. In order to obtain the said permit the applicant must submit to Central Insurance of Iran the following documents and information:
1. The Company's articles of association;
2. Amount of capital of the company;
3. A full list of the names of partners, directors, and their nationalities and the number of shares of each one of them;
4. The amount of cash and non- cash shares and manner of their payment;
5. Any other documents and information which the Central Insurance of Iran deems necessary for determining the financial and technical competency of the company and the good reputation of its directors.

 

Article 39

When a request for the issue of a permit has been submitted to Central Insurance of Iran, the latter is bound within a maximum period of 60 days from the date of submission of the last document and information requested, and with due observance of the text of section 1 of article 17, to announce to the applicant the views of the General Assembly in writing on the acceptance or rejection of the request.
If the applicant has objections on the view announced, he could within a period of 30 days, submit his objections to the Council of Ministers. The decision adopted by the Council of Ministers should be final.

 

Chapter 3- Cancellation of Permit

 

Article 40

An insurance permit for all fields or specific fields will be cancelled in the following cases, after concurrence of the High Council of Insurance and the approval of the General Assembly of Central Insurance of Iran.
1. In the case of such a request by the permit holder;
2. In case where the insurance company has not started its operations one year after the issuance of the permit;
3. In cases where the Central Insurance of Iran considers the financial state of the insurance company to the such that it cannot meet its commitments, or it is proved to Central Insurance of Iran that the continued operation of the company is detrimental to Insured and / or their beneficiaries.

 

Article 41

In cases where the company operates contrary to its articles of association or the laws and by-laws governing insurance operations, then on the proposal of the Central Insurance of Iran and the approval of the High Council of Insurance it will temporarily be prohibited from accepting insurance in specific fields.

 

Article 42

In cases where the permit of an insurance company has been cancelled in accordance with Article 40, the said company can, within 30 days, refer the matter to the Council of Ministers and request cancellation of the decision adopted.
The decision of the Council of Ministers should be final.

 

Article 43

Notification of the issuance or cancellation of the permit of an insurance company, and the information which is necessary from the view point of protecting the interests of Insurance and the Insured and their beneficiaries will be published, at the expense of the relevant company itself, by the Central Insurance of Iran in the Official Gazette and in one of the mass circulation newspapers of Tehran. In cases where the insurance company has branches or agencies in another town or towns, the above notice will also be published in one of the newspapers of such towns, in two separate issues of the same, with an interval of one month in between.

 

Article 44

In cases where the permit of an insurance company is permanently cancelled for one or a number of fields, the Central Insurance of Iran, with the approval of the High Council of Insurance will transfer to the Iran Insurance Company all past records and document relating to the rights and obligations (portfolio of the said company) or make such other arrangements which will guarantee the interests of the insured and their beneficiaries.

 

Chapter 4 - Regulations Relating to Foreign Insurance Companies

 

Article 45

As from the date of the approval of this law, the start of operations by foreign insurance companies in Iran will be subject to proposal of the Central Insurance of Iran, the confirmation of the High Council of Insurance and the approval of the Council of Ministers.

 

Article 46

Foreign insurance companies must, according to regulations to be proposed by the Central Insurance of Iran and approved by the High Council of Insurance, deposit an amount with the Central Insurance of Iran for each one of two fields; i.e. life insurance and other kinds of insurance.
The amount of this deposit in each one of the two fields mentioned will not be less than 500,000 dollars or the equivalent in foreign exchange acceptable by the Central Bank of Iran. Each foreign insurance company should, year after year, add its income to the above-mentioned deposit, so that in each case the amount of the deposit reaches a minimum of twice the amount approved by the High Council of Insurance.

Section 3- Transfer of Operations and Amalgamation

 

Article54

Insurance Companies may, with the agreement of the Central Insurance of Iran and approval of the High Council of Insurance, allocate all or part of its portfolio with all its rights and obligations, to one or a number of other authorized insurance companies.

 

Article 55

The request for transfer of the portfolio of one insurance company to other insurance companies will be published as a notice by the Central Insurance of Iran, twice at intervals of ten days in the official and in one of the local mass circulation newspapers of another city at the cost of the company making the transfer request.

 

Article 56

After expiration of three months from the date of the last notice, the Central Insurance of Iran will in case it has full confidence that the transfer will not harm any of the rights of the insured and policyholders and their beneficiaries. Announce its agreement to the transfer of portfolio in writing to the insurance company making the request.
 

All property owned by insurance companies as well as the deposits mentioned in Articles 36 and 46 should be regarded as guarantees for the rights and claims of Insured, Policyholders and their beneficiaries, and in cases of dissolution or bankruptcy of an insurance company, the Policyholders and the Insured and their beneficiaries will have priority over other creditors. Also in this regard, among various insurance fields, priority will be given to holders of life insurance policies.
Insurance organizations cannot, without the prior agreement of the Central Insurance of Iran, give their proportion in place of rights or wages, and/or mortgage them, or subject them to any kind of transaction with rights to reclaiming and receiving them back.
Official Notaries Public are obliged, when such transactions take place, to ask for the letter of agreement and authorization of the Central Insurance of Iran and to enter its text in the transaction document.
 

Article 61

Insurance are obliged to maintain technical and statutory reserves, and clearly reflect the manner of using such reserves in their account books. The various kinds of technical and statutory reserves for each of insurance fields, and the amounts of such reserves and the basis of their calculation, as well as arrangements for utilizing such reserves, and the manner of evaluating moveable and immovable properties which represent the reserves of insurance companies, will be determined by the High Council of Insurance.

Article 62

All insurance companies are obliged to prepare their balance sheets and profit and loss accounts according to samples prepared by the Central Insurance of Iran and approved by the high council of Insurance. They should submit copies of their balance sheet to the Central Insurance of Iran after its proper approval by their own authorities.

 

Article 63

Insurance companies are obliged to publish their balance sheets in the Official Gazette and in at least one circulation newspaper of Tehran.

 

Article 64

Persons who have been condemned in Iran or abroad for committing crime, or robbery, or misusing property or money entrusted to them or fraud, or issuing checks with no funds, or embezzlement, or have been an accomplice in any of the above crimes and defaulting bankruptcies cannot be the founders or directors of directors of insurance companies. Similarly such persons should not be put in charge of insurance agencies neither should they be allowed to act as brokers.

 

Article 65

In cases where, on the verdict of the court, it becomes clear that bankruptcy of an insurance company has been due to the fault and fraud of a director or directors, and the properties of the respective company are not adequate to pay off obligations, then the directors will be responsible for paying the claims of the Policyholder and the Insured and their beneficiaries.

 

Article 66

Insurance cannot be offered except by the following persons:
1. Insurance companies
2. Insurance agencies
3. Official insurance brokers
Note: Any staff member or insurance agent who offers insurance must possess an identity card issued by the respective insurance company. The name of the official broker or insurance agent through whom the insurance has been offered must be mentioned in the insurance policy.

 

Article 67

Insurance companies and official insurance agents and official brokers are responsible for making damages caused to others in the course of carrying out their duties where such damage is due to their fault or negligence or that of their employees.

 

Article 68

A permit to act as an official insurance broker will be issued by the Central Insurance of Iran, and the by-laws governing the work of official insurance brokers will be approved by the High Council of Insurance on the proposal of the Central Insurance of Iran.

 

Article 69

Any insurance company which directly or through its agents insurance in a specific field or fields for which has no permit will be obliged to make damages of the party sustaining the loss or injury.
Note: Any real or legal person who, without having permit from insurance company poses as an insurance agent and accepts insurance for any one of the fields of insurance will be subject to the punishment stipulated in Article 238 of the General Penal Code.

 

Article 70

The following insurance business must exclusively be effected by insurance companies authorized to operate under this law:
a. Insurance of moveable or immovable properties existing in Iran.
b. Transport insurance for import goods, the purchase agreement for which has been concluded in Iran, or for which the documentary credit has been opened in Iran.

Note: Military equipment needed by the Ministry of Defense and Armed Forces Logistics, which may not be manufactured in Iran and whose sellers insure their shipment exclusively through insurers based in the country where they are located, should not be subject to clause B of this article upon proposal of the Minister of Defense and Armed Forces Logistics, approval of Central Insurance of Iran and consent of Minister of Economic Affairs & Finance.
c. Insurance relating to foreign workers and employees, (with the exception of life insurance and personal injury insurance) for the duration of residence in Iran of such workers and employees.
d. Insurance relating to Iranians resident in Iran.

 

Article 71

All insurance companies which operate in Iran must insure with the Central Insurance of Iran 50 percent of their direct insurance business in the field of life insurance, and 25 percent of their direct insurance in other fields. In its turn, the Central Insurance of Iran, with due regard to the capacity of each of the insurance companies operating in Iran to deal with such business and in the presence of equally favorable conditions being offered by each of such companies, should reinsure with the said insurance companies operating in Iran, all or part of such compulsory reinsurance business which it receives from them.
Note: what insurance companies accept under the heading of reinsurance is not subject to the provisions of this Article.

 

Article 72

The manner of allocating compulsory reinsurance business and the of commission, and participation in the profits will be determined for each field of Insurance by the High Council of Insurance.

 

Article 73

Insurance companies operating in Iran should be obliged to reinsure with Central Insurance of Iran under the same terms and conditions as they affect reinsurance abroad, the equivalent of 30 percent of the balance of the insurance affected directly by them in excess of the compulsory reinsurance.
In cases where the Central Insurance of Iran, for any reason, refrains from accepting this, then the said organization will be free to undertake reinsurance outside Iran. Transfer of foreign exchange on account of this 30 percent will be subject to presentation of a document granting permission for such transfer from the Central Insurance of Iran.
 

Article 74

Insurance companies whether Iranian or foreign, which up to the date of this law, have been registered under previous regulations and are engaged in insurance business, will not be obliged to obtain a new permit for those fields in which they are operating, but in any case, they are obliged within 18 months from the date of approval of this law to put their corporations on a basis of full conformity with the provisions of this law, otherwise their permit should be cancelled.
The High Council to Insurance can, with due regard to reasons given and other considerations invoke or renew the above period once.

Article 75

Insurance companies which work in Iran will be recognized as member of the Iran Insurance Syndicate. The articles of association of this Syndicate will be drawn up by the Central Insurance of Iran in consultation with the members of the Syndicate within a maximum of 6 months after the Central Insurance of Iran, and will be approved by the High Council of Insurance.

 

Article 76

Insurance companies, which operate in Iran, will be required to observe the instructions of the Central Insurance of Iran, which will be issued with the limits of this law and the by-laws relevant to it.

 

Article 77

All laws and regulations, which conflict with the provision of this law, will become null and void as from date of approval of this law.
The above law, with 77 Article and 10 Notes, after being approved by the Senate on 29.3.1350 (June 19,1971), was approved by the Majlis (Islamic Consultative Assembly) on Khordad 30,1340 (June 20,1971).