Insurance Operation

 

Section 1- Insurance Organizations

Chapter 1- General
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 shall be subject to the provisions of chapter 5 of this Law.
Note2: Determination of what operations shall 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
More than 20 percent of the shares of Iranian insurance organizations cannot be transferred to legal persons of foreign nationality, and such transfer can be made only with prior consent of Central Insurance of Iran.

Article 36
Iranian insurance organizations shall 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 shall 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 shall 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 shall, 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.
Increasing the deposit in excess of the above amounts shall then be voluntary.

Article 47
There shall be no obstacle to the transfer abroad of the income of foreign insurance organizations, after completing the deposit mentioned in Article 46, on condition that the amount transferred in each year does not exceed 10 percent of the amount kept as a deposit with the Central Insurance of Iran.
Note: Arrangements for the transfer of income in excess of the deposit at the rate of 10 percent per year mentioned in this Article shall be subject to the proposal of the Central Insurance of Iran, confirmation of the High Council of Insurance and approval of the Council of Ministers.

Article 48
Foreign insurance companies operating in Iran must notify in writing the name of their representative who shall be resident in Iran and shall have adequate powers for administering all the operations of the organization in Iran, and carrying out the commitments on the part of the parent insurance organization. The said representative will be responsible for all the operations of the principal insurance organizations in Iran, and must possess a power of attorney which stipulates the limits of his powers and gives him the right to elect an authorized representative or a deputy in his own place.
It shall be obligatory for the above-mentioned representative to sign all insurance policies concluded in Iran, personally or by means of his deputy or authorized representative without approval of the parent insurance organization being necessary, and he must also have authorization to act as a defendant or plaintiff in a court suit and have the right to delegate power to an attorney and be authorized to settle disputes by conciliation.

Article 49
The representative of the foreign insurance organization will limit his insurance operations in Iran to the extent of the powers granted to him by the parent insurance organization, and in cases where in any one of insurance fields the parent insurance organization is deprived of its authority for insurance on temporary or permanent basis, and /or the parent insurance company cancels part or all of the powers of its representative then the representative must inform the Central Insurance of Iran in writing of the matter.
 

Article 50

Foreign insurance companies, in addition to being subject to the provisions of this law and the relevant by-laws, will also be subject to the general laws and regulations relating to foreign companies and organizations.

Section 2- Dissolution and Bankruptcy

Article 51

In cases where the bankruptcy of an insurance company is announced, the court shall, prior to any decisions, ask for the views of the Central Insurance of Iran. The Central Insurance of Iran must within 15 days of the date of receiving the court's inquiry, announce its views to the court in writing. The court will then make its decision with due regard to the views of the Central Insurance of Iran.

Article 52

Cancellation of the permit of an insurance company for all insurance operations shall entail dissolution of the organization, and in such a case the provisions of Article 44 of this law will be implemented.

Article 53

Settlement of the accounts of a bankrupt insurance company will be conducted according to the Commercial Law. In places where there is no Bankruptcy Settlement Department, the court will appoint the Central Insurance of Iran to deputize for the Bankruptcy Settlement Department, and in the area of jurisdiction of provincial courts where a Settlement Department has been set up, the Settlement Department will perform the settlement affairs with the assistance of the Central Insurance of Iran.

Section 3- Transfer of Operations and Amalgamation

Article 54

Insurance Company 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.

Article 57

In cases where the Central Insurance of Iran's agreement has been given to the transfer of portfolio, then this transfer will be valid for all the Insured and policyholders and their beneficiaries from the date of transfer.

Article 58

One or a number of insurance companies can, with due observance of the provisions of Article 55, 56 and 57, and with the agreement of the Central Insurance of Iran and approval of the High Council of Insurance merge with another insurance company.

Article 59

The Central Insurance of Iran may, for the purpose of protecting the rights of Policyholders and the Insured and their beneficiaries, or by reason of economic consideration and with a view to safeguarding the interests of the insurance industry, with the confirmation of the High Council of Insurance, and approval of the General Assembly, oblige those insurance companies whose financial or administrative conditions are not satisfactory, to amalgamate with other insurance companies. And in cases where this amalgamation does not take place, the permit of that company whose financial or administrative conditions are not satisfactory will be cancelled under the provisions of this law.
The decision of the Central Insurance of Iran, in addition to being notified in writing to the respective companies, will also published for the information of the public in the official Gazette and in one of the mass circulation newspapers of Tehran, and if necessary in one of the local newspapers in other cities.

 Section 4- Various Regulations
Article 60

 

All property owned by insurance companies as well as the deposits mentioned in Articles 36 and 46 shall 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 shall 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 shall not be put in charge of insurance agencies neither shall 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.
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, shall 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 shall 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 shall 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 on Khordad 30,1340 (June 20,1971).

 

 

Insurance Law in Iran

Chapter I
Definitions

ARTICLE 1

In these regulations, the following terms are used in lieu of the corresponding phrases:

A. Free Zones: Free Trade-Industrial Zones of the Islamic Republic of Iran;
B. Other parts of the country: the Islamic Republic of Iran excluding the Free Zones;
C. Zone: each one of the Free Zones;
D. Authority: Authority responsible for the administration of each Free Zone;
E. Institutions to which these regulations apply: all institutions referred to in article 2 of these regulations;
F. Insurance institutions: the insurance institutions authorized to operate, under the provisions of these regulations, in the Zone;
G. Mutual insurance institutions: the insurance institutions that render their services, in form of mutual insurance, exclusively to their members;
H. Insurance broking institution: a legal person that acts as an intermediary between the parties of insurance and /or reinsurance transactions in exchange for a commission and whose business is only to provide insurance services;
I. Branch: a unit, affiliated to one of the Iranian insurance institutions, operating within the framework of functions and duties, and under the name and authorization of the principal institution in the zone;

J. Insurance agency: areal or legal person undertaking some of the functions and duties of an Iranian insurance institution, in the Zone, on the basis of an insurance agency contract and provisions of these regulations.

 

Chapter II
Establishment
ARTICLE 2

Insurance and reinsurance operations in Free Zones shall take place through institutions that based on the proposal of the Authority and under the provisions of these regulations obtain permission from Bimeh Markazi Iran and are registered in one of the following forms:
1. Iranian joint stock or cooperative insurance companies with real and/or legal Iranian and/or foreign shareholders with registered shares.
2. Insurance agency and/or broking institution;
Note 1. Subject to provisions of these regulations and registration in the Zone, insurance institutions are permitted to establish branches.
Note 2. Subject to rules to be approved by the High Council of Insurance, granting insurance agency to real persons is permitted,
Note 3. Operation of branches and agencies of insurance institutions, operating in other parts of the country, is allowed in each Free Zone, under the provisions of the Establishment Act of Bimeh Markazi Iran and Insurance Operations, within the framework of these regulations and other rules governing the said institutions.
ARTICLE 3

Institutions authorized to operate in the Zone, within the framework of these regulations, are not permitted to provide insurance for persons residing and risks located in other parts of the country and transport insurance for goods imported to other parts of the country, the purchase contract of which is concluded or its letter of credit is opened in Iran. Reinsurance transactions are excluded from this Article.
Note 1. Institutions authorized to exclusively operate direct insurance in the Zone are not permitted to accept reinsurance from insurance institutions operating in other parts of the country.
Note 2. Insurance institutions are entitled to insure properties and liabilities (except that of life insurance) of the Special Economic Zones within the provision of these regulations and in compliance with relevant rules and regulations.
Note 3. Issuance of insurance policies by the insurance institutions of the Free Zones for those risks the coverage of which is not offered by Iranian insurance institutions operating in other parts of the country is exception to this Article. The list of such risks permitted to be insured by the insurance institutions shall be prepared and communicated to the Authorities within three months from the date of the approval of these regulations, at the latest.
ARTICLE 4

Minimum capital for insurance institutions, insurance agencies and insurance brokers are as follows:
1. Direct insurance institutions are established with a minimum capital of fifteen billion (15,000,000,000) IRR, at least fifty percent (50%) of which must be paid initially;
2. Mutual insurance institutions are established with a minimum capital of two hundred million (200,000,000) IRR at least fifty percent (50%) of which must be paid initially;
3. Reinsurance institutions are established with a minimum capital of eighty - five billion (85,000,000,000) IRR at least fifty percent (50%) of which must be paid initially;
4. Insurance agencies and / or broking institutions are established with a minimum capital of three hundred million (300,000,000) IRR at least fifty percent (50%) of which must be paid initially.
Note 1. The amounts indicated in this Article may be adjusted every two years subject to joint proposal of the Secretariat of the High Council of Free Zones and Bimeh Markazi Iran and its approval by the Council of Ministers;
Note 2. Foreign shareholders of the institutions to which these regulations apply must pay their shares in the foreign currencies acceptable to the Central Bank of Iran and/or must produce a foreign currency conversion certificate.
Note 3. The capital funds, subject of this article must be deposited in one of the banks certified by the Central Bank of the Islamic Republic of Iran and preferably in the banks which hold branches in the Free Zones.

 

Chapter III
Registration and Operation Permit
ARTICLE 5

The registration of the institutions to which these regulations apply, in the Zone is subject to the presentation of the registration permit issued by Bimeh Markazi Iran. Also the registration of any subsequent changes in the articles of association, amount of capital and shares of the previously registered institutions, is subject to the approval of Bimeh Markazi Iran.

ARTICLE 6

To secure a registration permit the following documents and information must be submitted to Bimeh Markazi Iran:
A. Articles of Association of the institution;
B. The institution’s amount of capital, the receipt or a commitment letter for its payment
C. The paid and non-paid portion of the shares and the method of payment ;
D. Lists of shareholders, inspectors and directors and their nationalities, and number of shares to be owned by each of them;
E. Other documents, papers and information confirming financial and technical integrity of the institution and its directors.
Note. The registration permit will remain valid for 6 months. If the institution is not registered within the said period, another registration permit must be obtained.

ARTICLE 7

Bimeh Markazi Iran, in compliance with Article 28 of the Law on the Administration of the Free Trade - Industrial Zones in the Islamic Republic of Iran (ratified in 1993) and the provisions of these regulations, is obliged to announce, in writing, its views on the acceptance or rejection of the application to the Authority within 30 days from the date of the submission of the last requested documents and information.
Note. In case of rejection, applicants are entitled to submit their objections to the General Assembly of Bimeh Markazi Iran within 30 days. The decision of the General Assembly shall be final and binding.

ARTICLE 8

Upon receiving the registration certificate of the institution in the Zone, Bimeh Markazi Iran will issue an operation permit for one or more classes of direct insurance, reinsurance or both.

 

Chapter IV
Cancellation of Permit and Restriction of Operation

ARTICLE 9

The operation permit issued by Bimeh Markazi Iran in either all fields or specific fields will be cancelled in the following instances:
A. At the request of the permit–holder.
B. In case, the institution does not commence its operations in the Zone within one year starting the date of the permit;
C. Bankruptcy of the institution;
D. If, at the discretion of Bimeh Markazi Iran supported by the High Council of Insurance, the institution is not financially capable to fulfill its commitments; or if the continuation of institution’s operation is to the detriment of insured, assureds and their beneficiaries;
E. On the ground of other prescribed instances in these regulations.

ARTICLE 10

In case the institution to which these regulations apply, acts in contravention of its articles of association or the provisions of these regulations or, as announced by the Authority in contravention of other regulations governing such institutions in the Zone, at the suggestion of Bimeh Markazi Iran and with the approval of the High Council of Insurance, its operation in a field or in specific fields or in reinsurance will be temporarily or permanently banned.

ARTICLE 11

Issuance and cancellation of the operation permit for the institutions to which these regulations apply or the temporary suspension of their operation as well as the necessary information, protecting the interests of the insured, assureds, and their beneficiaries shall be announced twice within interval of one month through the Iran’s official gazette and one of the mass-circulated newspapers in Tehran and the Zone by Bimeh Markazi Iran at the expense of the institution.

ARTICLE 12

In case the operation permit of an insurance institution is permanently cancelled in one or more insurance or reinsurance fields, at the suggestion of Bimeh Markazi Iran and with the approval of the High Council of Insurance arrangements will be made to protect the interests of the assureds, insured and their beneficiaries. These arrangements might include the portfolio transfer of the institution together with all the records and documents relating to its rights and liabilities to another institution authorized to operate in the Zone.

 

Chapter V
Rules of Operation

ARTICLE 13

Insurance institutions to which these regulations apply are obliged to maintain statutory and technical reserves and specifically disclose the application of such reserves in their accounts. The various types of the statutory and technical reserves for each of the insurance classes together with the criteria for calculations and the manner of application of such reserves and the capital of the institution as well as evaluation methods of the movable and immovable properties representing financial resources of said institutions should be in accordance with the guidelines to be approved by the High Council of Insurance.

ARTICLE 14

Insurance institutions to which these regulations apply, are obliged to reinsure with Bimeh Markazi Iran ten percent (10%)of all their direct insurance businesses. Bimeh Markazi Iran can accept or reject the said reinsurance.
Note. The commission rate and terms of such reinsurance shall be in accordance with the guideline to be approved by the High Council of Insurance.

ARTICLE 15

The properties of insurance institutions to which these regulations apply and also reserves referred to in Article 13 are regarded as securities to protect the rights and interests of the insured and assured and their beneficiaries; and in the event of dissolution or bankruptcy of the institution, priority will be given to them over other creditors.
Note 1. Among various insurance classes, priority is given to life insurance.
Note 2. The institutions referred to in this article are not allowed to convey the rights of, or mortgage, their properties and / or place them as a subject of any type of transaction with a right of refund without prior agreement of Bimeh Markazi Iran;
Note 3. At the time of the registration of transactions subject of note 2 of this Article, public notaries are obliged to ask for the agreement of Bimeh Markazi Iran and to reflect its contents in the document, on the basis of the latter part of Article 60 of the Establishment Act of Bimeh Markazi Iran and Insurance Operation.

ARTICLE 16

Insurance institutions, to which these regulations apply, are obliged to publish their balance sheet and profit and loss account in one of the mass-circulated newspapers in Tehran and the Zone.

ARTICLE 17

Insurance institutions, to which these regulations apply, are obliged to inform Bimeh Markazi Iran of any changes in the institution’s major shareholders, directors and inspectors (auditors) within 2 weeks.

ARTICLE 18

Persons convicted, in Iran or abroad, for such charges as murder, theft, breach of trust, fraud, drafting rubber cheque, embezzlement or complicity in the said crimes and also fraudulent or culpable bankrupts, cannot be one of the founders or directors of the institutions to which these regulations apply.

ARTICLE 19

In case of merger, transfer of operations, dissolution and bankruptcy, insurance institutions to which these regulations apply are subject to the provisions of these regulations and Articles 51 to 59 of the Establishment Act of Bimeh Markazi Iran and Insurance Operation.

 

Chapter VI
Supervision

ARTICLE 20

Bimeh Markazi Iran will supervise the operations of Insurance institutions to which these regulations apply in the Zone, in accordance with the provisions of these regulations

ARTICLE 21

Depending on the case, institutions to which these regulations apply are required to:
A. Prepare and keep their accounts and financial statements in accordance with the formats to be approved by the High Council of Insurance at the suggestion of Bimeh Markazi Iran;
B. Submit copies of their financial statements examined and commented by the auditors accredited by Audit Organization of Iran ,or internationally recognized auditors, to Bimeh Markazi Iran, within 6 months from the end of the fiscal period, at latest.
C. Prepare statement of their annual insurance operations in accordance with the formats prepared by Bimeh Markazi Iran and to submit to Bimeh Markazi Iran within 3 months from the end of the relevant period.
D. Provide Bimeh Markazi Iran with other regular or ad-hoc information and statistics as Bimeh Markazi Iran may deem necessary for supervising proper implementation of these regulations.
E. Cooperate with and put the necessary information at the disposal of the inspectors who are assigned, in writing, by one of the members of the Executive Board of Bimeh Markazi Iran with prior notification to the Secretariat of the High Council of Free Zones;
Note. Insurance institutions offering long-term life policies, in addition to observing the above clauses, are obliged to appoint an actuary who is acknowledged by Bimeh Markazi Iran to examine and to confirm the relevant accounts and technical reserves.

ARTICLE 22

In addition to their legal and professional duties, the auditors of the insurance institutions to which these regulations apply are obliged to comment on the proper implementation of provisions of these regulations in their final reports.

ARTICLE 23

In case Bimeh Markazi Iran observes any breach in application of the relevant regulations by the institutions to which these regulations apply, it will give written notices to the institution and the Authority asking for rectification of the case in a specified period.
If the case is not rectified in due course, or if it reoccurs, pertinent to importance of the case, Bimeh Markazi Iran, with written notice, will give effect to Article 10 of these regulations.

ARTICLE 24

Net asset value (the shareholders’ equity) of the insurance Institutions to which these regulations apply shall at no time be less than the greatest figure arising from the following clauses:
A. Ninety (90) percent of minimum paid-up capital, in accordance with the provisions of these regulations;
B. Ten percent (10%) of the gross written premiums for the last fiscal year multiplied by the Loss Retention Ratio of the same period;
C. Fourteen point three percent (14.3%) of the annual average of the total incurred losses for the last three fiscal periods multiplied by the Loss Retention Ratio for of the period.
Note. For the purposes of this article” Loss Retention Ratio for the period” is defined as:
Total incurred losses after deducting the reinsurer’s shares
Total incurred losses of the relevant period.

ARTICLE 25

An insurance institution which fails to meet the requirements of Article 24 of these regulations, within three months from the deadline set for the submission of its financial statements, shall present for approval to Bimeh Markazi Iran, a scheme showing that the institution will be able to meet the said requirements. If not, Bimeh Markazi Iran will restrict the operation or cancel the permit of such insurance institutions in compliance with the provisions of these regulations. At any rate, the period for the implementation of such proposed scheme should not be more than one year.

ARTICLE 26

Institutions to which these regulations apply are obliged to maintain and invest all their assets representing liabilities and underwriting reserves, as well as their capital and other reserves, only in the Free Zones or in the other parts of the country.
Note. A part of the assets subject of these regulations might be maintained abroad with the approval of the Authority and consent of Bimeh Markazi Iran. 

 

Chapter VII
Other Regulations

ARTICLE 27

Insurance institutions and insurance agents and brokers are liable to compensate for the losses caused to others due to their or their employees’ fault or negligence in the way of carrying their duties out. Any insurance institution that directly or through its agents affects insurance in a field or fields for which it has no permit is obliged to compensate the damages sustained by others.

ARTICLE 28

The authority prevents unauthorized insurance and /or reinsurance operations, subject of these regulations upon the direction of Bimeh Markazi Iran and if necessary Bimeh Markazi Iran will take legal action, according to article 21 of” Criteria on Registration of Companies, and Industrial and Intellectual Property Rights” in Free Trade –Industrial Zones of the Islamic Republic of Iran-Decreed by the High Council of Free Trade Industrial Zones on May 20 1995 –and the other relevant laws and regulations.

ARTICLE 29

Whenever the Head of the High Council of Insurance arranges a Council Meeting to make decisions about the issues relating to the establishment or operation of the insurance institutions in the Free Zones, he will also invite the Secretary of the High Council of Free Zones or his representative to attend the meeting. The Secretary of the High council of Free Zones or his representative will also have the right to vote at these meetings.

ARTICLE 30

The operation of the institutions to which these regulations apply is subject only to the provisions of these regulations and in cases not foreseen, regarding the administration of the institution, is subject to Commercial Law and the Law on Amending Part of the Commercial Law.

ARTICLE 31

With effect from the date of the approval of these regulations all contradicting regulations, in the region, are cancelled.

Hassan Habibi
First Vice-President (Signed)
( 28 Aug., 2000)

Bimeh Markazi Iran
Secretariat
No. 10575

Date: 4 Sept. 2000
Bimeh Markazi Iran
Insurance offices Management (Sealed)
CERTIFIED CORRECT TRANSLATION
Tehran, 10 Sept 2000
(No. 337)

RELATED LEGAL BASES:
ARTICLE (28) ATTACHED TO THE ACT ON HOW TO RUN THE FREE TRADE- INDUSTRIAL ZONES IN THE ISLAMIC REPUBLIC OF IRAN (APPROVED IN 1999):
ARTICLE 28. The establishment and activity with domestic and foreign capital of Iranian Insurance institutions and their branches and agencies and of insurance agency Institutions in the Free trade- industrial Zones in the Islamic Republic of Iran is permitted, and it is merely governed over by the regulations to be ratified by the council of ministers at the suggestion of Bimeh Markazi Iran.

ARTICLE (21) CRITERIA FOR REGISTRATION OF COMPANIES AND INDUSTRIAL AND SPIRITUAL OWNERSHIPS IN THE FREE ZONES (APPROVED IN 1995):
ARTICLE 21

At the request of the Organization, those violating the implementation of the provisions of this approval will be prevented by the disciplinary force of the Zone from continuing their activities. At any rate, these actions will not relieve the violating company’s and/or the Institution’s directors and real entities of their responsibilities vis-à-vis third parties.

Central Insurance of Iran
Insurance offices Management (sealed)
CERTIFIED CORRECT TRANSLATION
Tehran, 10 Sept 2000
(No. 337)

 

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