Call for Natural Disasters Insurance Fund Following Quake

EghtesadOnline: A few days after a 7.3-magnitude earthquake shook the western province of Kermanshah and the regions bordering Iraq, the president of the Central Insurance of Iran renewed his call about the necessity of establishing a natural disasters insurance fund.

News ID: ۷۴۴۴۵۸

18 November 2017

“It is natural that during the first days after the earthquake, all national organizations and people rush to help the damaged areas, but after the dust is settled, the matter of covering financial damages will be the country’s top issue,” Abdolnasser Hemmati was also quoted as saying by IRNA.

The CII president noted that Kermanshah’s disaster was not the first and will not be the last, so Iran must take a page out of other successful countries’ notebook to promote insurance coverage for natural disasters.

According to Hemmati, a bill aimed at establishing a natural disasters insurance fund was presented by CII several years ago, but has remained in limbo, Financial Tribune reported.

He urged the government and lawmakers to help ratify the bill, the realization of which would mark a revolution in the earthquake insurance industry of Iran.

The official said that as insurance remains optional, a majority of people cannot be expected to enjoy the benefits of earthquake insurance.

“More than 85% of residential units are not currently covered by fire insurance, as the type of insurance that also contains earthquake insurance,” he said.

Hemmati called for fire insurance to become mandatory, noting that such a move has benefited the country in other insurance areas, such as personal auto policies, government workers’ life insurance and students’ accident insurance among others, which currently make up 70% of Iran’s total insurance portfolio.

According to the CII chief, the bill for the establishment of the natural disasters insurance fund will contain insurance policies that will have a mandatory base in tandem with further optional features, covering flood, earthquake, hurricane, lightning and tsunami.

Hemmati noted that basic premiums and other optional coverage specifics will be determined by CII’s High Council of Insurance and the fund itself will be the insurer, while people will be able to obtain premium features from other commercial insurance companies.

According to the latest report from Kermanshah, which experienced the strong quake on Nov. 12, more than 30,000 houses in the area were damaged and at least two villages were completely destroyed.