The reality of insurance in Iraq and draft legislation for compulsory insurance law

The Iraqi insurance sector suffers from a number of problems, some of which are of a historical nature, some of which have arisen in the last three decades. Some colleagues wrote articles and studies on these problems. In this short article, I would like to highlight some of the obstacles that have led to the weakness of the insurance sector in Iraq and the rapid introduction of the reform process.

It is very difficult to change the thinking of the society (the majority) arose on the absence of several cultures, including the insurance culture, in addition to the difficulty of gaining the confidence of the majority of Iraqi insurance companies and convince them that insurance is the best way to protect their property, and that there is a guarantor able to bear a large group of losses that May be exposed to it. If it is to be changed, it will take considerable efforts and years to show results in future generations

At present, I think the solution to the weakness of this sector is to legislate a mandatory insurance law. For example, the portfolio of fire shows a negative indicator in most insurance companies’ budgets because of the small premiums that are very symbolic against the amount of compensation achieved, which led to the reluctance of most insurance companies to issue a fire document. Therefore, the solution to overcome this situation (the lack of fire insurance premiums compared to the amount of compensation achieved in this section) is to make fire insurance mandatory for the owners of shops and stores (the largest source of fire losses) to create a safe fund capable of bearing all the compensation without exposure insurance companies To the loss that may exceed the premiums of other insurance portfolios.

In addition, it is possible to legislate the compulsory insurance law for motorists (outside the Compulsory Motor Accident Insurance Act of 1980, which is limited to liability insurance for bodily injury, including death) or imported goods (obligating importers of private and public companies to provide for the import contract to be On C & F basis – cost and freight only – to ensure insurance during transportation with Iraqi insurance companies).

The economic basis for these two types of compulsory insurance is to achieve a sound premium fund to finance compensation for material losses.

The Iraqi Insurance Association is always working to motivate and guide insurance companies to seek to promote their insurance documents with the preparation of forms of insurance policies from the conditions and exceptions and how to pricing, but this work alone is not enough because the association does not have legal authority and is purely service-oriented. In view of this situation, it is necessary to support the Insurance Bureau to coordinate with the competent authorities to promote this sector. We therefore believe that the SAI, in coordination with the Association, should initiate the study of the compulsory insurance project on certain risks and formulate the appropriate regulations in preparation for legislation.

Alaa Saeed Abdul Hamid

Gulf Insurance Company