A comparative study of the duties of insurance supervisory in Iran and selected countries

دانشنامه حقوق اقتصادی

Volume 30, Issue 23, August 2023, Pages 163-185   

Document Type: Original Article

DOI: 10.22067/economlaw.2023.81302.1255

Authors

Leili Niakan^{* 1}; Fatemeh Atatalab²

¹Assistance Professor, Department of General Insurance, Insurance Research Center, Tehran, Iran

²Researcher, Insurance Research Center, Tehran, Iran

Abstract

By compensating financial losses, insurance institutions guarantee the growth of the national economy and enable the continuation of economic development planning. They also play a special role in monetary and credit policies, and by concentrating national funds in the form of insurance premiums and creating technical reserves, provide the potential possibilities of large investments in various economic channels. Supervision of insurance operation has a central presence in process of economic growth and development, and development of insurance operation is closely related to the quality of supervision. Therefore, it is vital to create a structure in which goals and functions are presented clearly and appropriately, and where necessary, takes action according to the weakness of the insurer/system.
In this research, while examining the basics of supervision and regulation in insurance industry, the structural and institutional framework of the insurance supervisor in selected countries has been studied and the powers and responsibilities of these institutions in line with effective supervision and regulation have been examined and compared.
The results show that logic of regulation in the insurance sector is to protect the interests of the insured, promote the stability of the insurance market and prevent inappropriate behavior of insurers.
Monitoring the performance of insurance companies can be planned in many technical, economic and legal branches that incudes controlling the conditions of establishment, granting and revoking the activity license, compatibility of policies general conditions with laws, control of technical and financial affairs from legal point, control of loss payment and settle accounts. Sufficient power, legal support and financial resources; operational independency especially from political institutions and insurers; accountability and transparency in functions and powers; possibility of hiring, training and maintaining human resources; level of market efficiency and level of access to information are the most important prerequisites for the effectiveness of supervision.

Keywords

Supervision; Regulation; Structure; Operational independency; Accountability

References

 

References

[1] Ahn, J., Wook Shin, H., Todd, K. L., & Mi, B. (2023). Insurance and reinsurance in South Korea: overview. Retrieved from Practical Law: https://uk.practicallaw.thomsonreuters.com/6-521-5158?transitionType=Default&contextData=(sc.Default)&firstPage=true.

[2] Atatalab, F., & Ansari, A. (2015). Examining the structure and function of insurance supervisory institutions in selected countries and providing practical suggestions to improve the structure and function of Central Insurance of Iran. Insurance Research Center. (In Persian).

[3] ASIC. 2023. ASIC fees. <https://asic.gov.au/for-business/payments-fees-and-invoices/asic-fees/>

[4] ASIC. (2021). Our role, <http://asic.gov.au/about-asic/what-we-do/our-role/ >.

[5] BaFin. (2022). Function and composition of the advisory board. Retrieved from: https://www.bafin.de/EN/DieBaFin/GrundlagenOrganisation/Gremien/Fachbeirat/fachbeirat_node_en.html;jsessionid=689503FCAF3664C85E40C884706E477D.1_cid501.

[6] Bank of England. (2013). Macroprudential policy at the Bank of England, Quarterly Bulletin 2013: Q3. 53 (3).

[7] Braithwaite, J., Coglianese, C., & Le, D. (2007). Can regulation and governance make difference. Blackwell Publishing Asia Pty Ltd. Australia.

[8] Compulsory insurance law for damages caused to third parties due to accidents caused by vehicles. Approved on 2016. (In Persian).

[9] Farshbaf, J. (2009). The basics of supervision in the insurance industry. Insurance Research Center. (In Persian).

[10] Glaeser, E. l., & Shleifer, A. (2003). The rise of regulatory state. Journal of Economic Literature. 41(2): 401-425.

[11] Government of Canada. (2022). Financial institution supervisory committee infographic (osfi-bsif.gc.ca). Retrived from: https://www.osfi-bsif.gc.ca/Documents/WET3/FinSystem/eng/fisc-infographic.html.

[12] IA. (2019). Insurance Authority. Retrived from: ia.org.hk/en/aboutus/role/history.html.

[13] IA. (2021). Insurance ordinance (Cap. 41). Insurance Authority. < https://www.elegislation.gov.hk/hk/cap41>

[14] IMF. (2011a). Germany: financial sector assessment program—detailed assessment of observance on insurance core principles. IMF Country Report No. 11/272.

[15] IMF. (2011b). United Kingdom: the future of regulation and supervision technical note. IMF Country Report No. 11/230.

[16] IMF. (2012). Australia: insurance core principles—detailed assessment of observance. IMF Country Report No. 12/312.

[17] IMF. (2013a). India: financial sector assessment program—detailed assessments report on IAIS insurance core principles. IMF Country Report No. 13/265.

[18] IMF. (2013b). Malaysia: publication of financial sector assessment program documentation— detailed assessment of observance of insurance core principles. IMF Country Report No. 13/57.

[19] IMF. (2014). Financial sector assessment program-insurance core principles- detailed assessment observance. IMF Country Report No. 14/72.

[20] Kial, M., Bagheri, M., Zareii, M., & Hashemi, S. (2019). A comparative study of the structure of insurance regulation and supervision in the United States and Iran. Comparative Law Review. 10(1): 279-295. (In Persian).

[21] Law on the Establishment of Central Insurance of Iran and Insurance. Approved on 1971. (In Persian).

[22] Mahmud Salehi, J. (1990). Supervisory and monitoring rights in insurance. Insurance Industry Quarterly. 15(58): 13-39. (In Persian).

[23] OECD. (2018). The institutional structure of insurance regulation and supervision. <www.oecd.org/finance/The-Institutional-Structure-of-Insurance-Regulation-andSupervision>.

[24] Regulation No. 69 of the Supreme Council of Insurance. (2012). How to calculate and monitor the solvency of insurance institutions. (In Persian).

[25] Regulation No. 75 of the Supreme Council of Insurance. (2012). Regulation of agents' affairs. (In Persian).

[26] Regulation No. 78 of the Supreme Council of Insurance. (2012). Official insurance actuary. (In Persian).

[27] Regulation No. 90 of the Supreme Insurance Council. (2014). How to verify the professional qualification of key and operational employees of insurance institutions. (In Persian).

[28] Regulation No. 85 of the Supreme Council of Insurance. (2013). Regulation of insurance loss assessment matters. (In Persian).

[29] Regulation No. 88 of the Supreme Council of Insurance. (2014). Reporting and information disclosure of insurance institutions. (In Persian).

[30] Regulation No. 76 of the Supreme Council of Insurance. (2013). How to assign compulsory reinsurance and the amount of fees and participation in its profits. (In Persian).

[31] Regulation No. 68 of the Supreme Council of Insurance. (2013). Life and pension insurances. (In Persian).

[32] Rostami, V., Hashemi, S. M., & Taqvai, M. R. (2015). Regulatory challenges in the country's commercial insurance industry. Journal of Administrative Law. (In Persian).

[33] Schaloske, H., & Feldmann, K. (2021). Insurance & reinsurance: Germany. Country Comparetive Guides 2020. The Legal 500.

[34] Şenocak, A., & Kösoğlu, M. (2021). Insurance and reinsurance in Turkey: overview. Practical Law.

[35] Statistical annual report of the insurance industry. (2022). Central Insurance of Iran. (In Persian).

[36] Tayar, Sh. (2021). Comparative evaluation of the structure of human resources and the regulations of the insurance supervisory body to respond to the development of the country's insurance companies and institutions. Insurance Research Center. (In Persian).

[37] UNCTAD. (1996). For issues of insurance regulation and supervision and relevant developing countries. United Nations Conference on Trade and Development.

[38] Yazdan Panah, A. & Khalilzadeh, P. (2013). Risk-based supervision in the insurance industry: a conceptual framework. 20th National Conference and the 6th International Conference on Insurance and Development. (In Persian).

[39] Yatkin, A. K., Bilgin, G., Aytug, K. A., & Atli, E. (2022). The insurance and reinsurance law review: Turkey. The Law Reviews.