In 2001 the Guardians Council (Iranian Upper House) ratified the Bill for the Administration of Private Insurance Companies. The bill's primary goal was to improve Iran's insurance industry competitiveness and efficiency. The bill however, made clear that supervision and issuance of insurance schemes will continue to be to be part of government duties. The Central Insurance Authority of Iran (CIAI) is the regulator of the insurance sector. In 2004, the International Monetary Fund (IMF) in its country report on the Islamic Republic of Iran noted that the Iranian insurance regulatory framework was "outdated and very small" and that "authorization and licensing" of private insurance companies would be beneficial for the development of the sector. As of 2004, according to the IMF report, little progress was made in the direction of supervision or regulation. The process of privatization was not found adequate either.

General Overview

In 2001, the Guardians Council (Iranian Upper House) ratified the Law on Administration of Private Insurance Companies. The main purpose of this bill was to improve Iran's competitiveness and efficiency in the insurance sector and also help speed up the economic development process. However, the Council maintained that the government will continue as the supervisory body with authority to issue insurance schemes as well.

The IMF in its 2004 "Selected Issues" report on Iran said that the insurance regulatory framework of Iran was "outdated and very small." According to this report,"[t]he compulsory reinsurance, tight tariff and contract regulation, and the specified proportions approach to achieving prudent investments tend to result in excessive premiums and limit innovation and development of this predominantly state-owned industry" (p. 50). IMF's Article IV Consultation report the same year, noted that the authorities' structural reform agenda for the entire financial sector was "ambitious" and that the implementation process had slowed down since 2003/04. In particular, adequate privatization was not taking place in insurance and the rest of the financial sector. Besides, little improvement had taken place in the area of supervision.

Under Iran's Fourth Five-Year Development Plan: 2005-2010, the IMF had called for an early implementation of reforms in the financial sector. The main thrust of the 2004 IMF report on Article IV consultation was towards greater privatization. The IMF had two key recommendations in the same report: (1) that a risk-based regulatory framework be implemented and (2) that the government divest from its reinsurance business. The objective for these recommendations was that the Central Insurance Authority of Iran (CIAI) could focus more on its regulatory and supervisory role. The CIAI has been carrying out local compulsory reinsurance as well as reinsurance business internationally as part of its duties to "expand" the industry. The Iranian government has wide and over-powering domination of the industry. For instance, Bimeh Iran is the government's own insurer and has massive share of the market. However, according to the CIAI website, approved foreign insurance and brokerage institutions are allowed to open contact offices in Iran. These offices are subject to Iranian regulatory laws that govern its insurance sector and are not permitted to sell insurance products or operate in the realm of insurance activities that exclusively belong to the local institutions. These offices can however, liaise between their mother company and Iranian companies on reinsurance matters or can also offer technical services and know-how on insurance.

According to its website, the CIAI was established in 1971 by the Act of Parliament with the objective of regulating, expanding and guiding the insurance industry in Iran. The CIAI or Bimeh Markazi is a state-owned institution. One of the key constituent organs of CIAI is the High Council of Insurance comprised of the president of CIAI as Chairman, Vice Ministers of Economic Affairs and Finance, Commerce, Labor and Social Services, and Agriculture together with 5 experts from the Insurance Industry. The Council also has powers to approve decrees and by-laws. After the 1979 revolution all players in the insurance market were nationalized. The government allowed for private sector insurance companies in Iran only after the privatization bill was passed in 2001. However, the Iranian government regulates all aspects of insurance. There is no independent supervisory or regulatory body. The domestic insurance market is dominated by state players. According to the May 2007 issue of Reinsurancemagazine, "[e]stablished as a state-owned (re)insurance company in 1935, Bimeh Iran has the largest share of state businesses, followed by Bimeh Asia, Albroz and Dana, also currently owned by the state." According to the Iran Daily newspaper report of February 2007, as of 2002 there were no private insurance companies in the mainland with only a few private companies in the free trade zone (FTZ) - which accounted for a .9 per cent share of the Iranian market. By 2005, according to the same source there were 11 private insurance companies operating in the mainland and around 3 in the FTZ.

Iran is not a member of the International Association of Insurance Supervisors (IAIS) (IAIS website).

The Principles

ICP 1 Conditions for effective insurance supervision

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There is insufficient information publicly available as to Iran's compliance with ICP1

ICP 2 Supervisory objectives

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There is insufficient information publicly available as to Iran's compliance with ICP 2.

ICP 3 Supervisory authority

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There is insufficient information publicly available as to Iran's compliance with ICP 3. According to its website, the CIAI has the authority to issue regulations and directives for the proper execution of insurance operations, to supervise insurance companies and provide protection to companies so as to ensure a sound functioning of the insurance market. Furthermore, the CIAI also has powers to regulate and supervise issues related to agencies, brokers and reinsurance matters to prevent "unfair" or "unsound" competition. According to the website, the CIAI was established in 1971 by the Act of Parliament with the objective of regulating, expanding and guiding the insurance industry in Iran. One of the key constituent organs of CIAI is the High Council of Insurance comprised of the president of CIAI as Chairman, Vice Ministers of Economic Affairs and Finance, Commerce, Labor and Social Services, and Agriculture together with 5 experts from the Insurance Industry. The Council also has powers to approve decrees and by-laws.

ICP 4 Supervisory process

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There is insufficient information publicly available as to Iran's compliance with ICP 4.

ICP 5 Supervisory cooperation and information sharing

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There is insufficient information publicly available as to Iran's compliance with ICP 5.

ICP 6 Licensing

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There is insufficient information publicly available as to Iran's compliance with ICP 6. According to the IIMR of 2001, the rules and regulations for running domestic insurance companies in Iran is based on the Law of Administration of Central Insurance Authority of Iran. Any private company must be established as an Iranian Joint stock company. Approved foreign insurance companies are also allowed to open their contact offices in Iran. However, these companies are not allowed to offer insurance or provide services made available exclusively by local companies. According to the CIAI website, "[c]ontact offices are allowed to liaise between their mother company and Iranian insurance institutions to follow up the reinsurance affairs, to offer technical services and to provide insurance technical know-how. CIAI shall supervise the operation of these contact offices, on the basis of its lawful duties."

ICP 7 Suitability of persons

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There is insufficient information publicly available as to Iran's compliance with ICP 7.

ICP 8 Changes in control and portfolio transfers

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There is insufficient information publicly available as to Iran's compliance with ICP 8.

ICP 9 Corporate governance

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There is insufficient information publicly available as to Iran's compliance with ICP 9.

ICP 10 Internal control

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There is insufficient information publicly available as to Iran's compliance with ICP 10.

ICP 11 Market analysis

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There is insufficient information publicly available as to Iran's compliance with ICP 11.

ICP 12 Reporting to supervisors and off-site monitoring

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There is insufficient information publicly available as to Iran's compliance with ICP12.

ICP 13 On-site inspection

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There is insufficient information publicly available as to Iran's compliance with ICP 13.

ICP 14 Preventive and corrective measures

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There is insufficient information publicly available as to Iran's compliance with ICP 14.

ICP 15 Enforcement or sanctions

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There is insufficient information publicly available as to Iran's compliance with ICP 15.

ICP 16 Winding-up & exit from the market

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There is insufficient information publicly available as to Iran's compliance with ICP 16.

ICP 17 Group-wide supervision

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There is insufficient information publicly available as to Iran's compliance with ICP 17.

ICP 18 Risk assessment and management

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There is insufficient information publicly available as to Iran's compliance with ICP 18.

ICP 19 Insurance activity

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There is insufficient information publicly available as to Iran's compliance with ICP 19.

ICP 20 Liabilities

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There is insufficient information publicly available as to Iran's compliance with ICP 20.

ICP 21 Investments

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There is insufficient information publicly available as to Iran's compliance with ICP 21.

ICP 22 Derivatives and similar commitments

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There is insufficient information publicly available as to Iran's compliance with ICP 22.

ICP 23 Capital adequacy and solvency

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There is insufficient information publicly available as to Iran's compliance with ICP 23.

According to the IIMR of 2001,"[t]he minimum capital of insurance companies, subject of Article 36 of Law of Administration of the Central Insurance Authority of Iran passed on May 20, 1971 (Insurance Operations Law), will be assessed upon the proposal of the Central Insurance Authority of Iran and approval of the Ministry of Economy and Finance and the Council of Ministers."

ICP 24 Intermediaries

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There is insufficient information publicly available as to Iran's compliance with ICP 24

ICP 25 Consumer protection

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There is insufficient information publicly available as to Iran's compliance with ICP 25

ICP 26 Information, disclosure & transparency towards the market

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There is insufficient information publicly available as to Iran's compliance with ICP26

ICP 27 Fraud

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There is insufficient information publicly available as to Iran's compliance with ICP 27

ICP 28 Anti-money laundering/ Combating the Financing of Terrorism

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There is insufficient information publicly available as to Iran's compliance with ICP 28