CEO of the government-owned Iran Insurance Company says the fact that insurer has to pay 20% of third party vehicle premiums to relevant bodies has given rise to prospects for loss-making.
Mohsen Pourliani said the IIC pays 20% of its income from third party vehicle premium to the Traffic Police and Ministry of Health.
“This has incurred costs to the tune of 48 trillion rials ($400 million) on IIC,” he was quoted as saying by ISNA.
Third party vehicle insurance is mandatory in Iran. It is essentially a form of liability insurance according to which, in the case of accident, the insurer is required to compensate the inflicted party for physical or financial loss according to the reimbursement ceiling set by the High Council of Insurance, affiliated to the Central Insurance company of Iran.
Insurance policy is bought by the insured (first party), from an insurer (second party) for protection against claims by another (third party).
HCI raised the premium rates and reimbursement ceiling for third-party auto insurance by 15% in the current fiscal year (started March 21) compared to the year ago.
The new annual premium rates can range from 3 million rials ($24) to 84 million rials ($619) depending on the type of vehicle (cars, buses and motorcycles).