Investigation of regulation theories in Iran’s insurance industry

دانشنامه حقوق اقتصادی

Volume 31, Issue 25, September 2024, Pages 213-232   

Document Type: Scientific research

DOI: 10.22067/economlaw.2024.86713.1349

Authors

Leili Niakan^{* 1}; Zeinab Behboodi Rad²; Ali Souri³

¹Assistance Professor, General Insurance Group, Insurance Research Center, Tehran, Iran

²Master of Economic Sciences, Faculty of Economics, University of Tehran, Tehran, Iran

³Associate Professor, Department of Theoretical Economics, Faculty of Economics, University of Tehran, Tehran, Iran

Abstract

Insurance industry as a financial institution has a specific role in economic growth and development. Therefore, the stability and efficiency of this industry is essential for the Economy. The insurance market is one of those markets where the actions of free agents does not lead to efficiency and is subject to market failure. The issue of market failure has provided justifications for the intervention of the government through the establishment of regulations in order to increase social welfare. Some economists have introduced theories to explain the necessity of regulations by the government. Among these theories are the public interest theory, capture theory, the economic theory of regulation and the Enforcement Theory of Regulation. Considering the existence of many rules and regulations in Iran's insurance industry, this research seeks to investigate the reasons for regulations in this industry according to the theories of regulation. In other words, which regulation theory has a better explanation for regulation in Iran's insurance industry? Were the regulations made in line with the public interest or the product of the efforts of interest groups to achieve their goals?

For this purpose, the main regulation theories have been reviewed and the regulatory process in Iran's insurance industry has been studied. In the following, based on the evidence, the theory that has the most compliance with the reasons for the regulations made in Iran's insurance industry has been identified. The analyzes showed that the theory of public interest provides the most appropriate framework to explain the regulations of the Iranian insurance industry.

Keywords

government intervention; market failure; insurance industry; regulation; public interest theory

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