Despite flooding that has killed 70, Iran’s efforts to establish an insurance fund are hampered by a lack of resources.
As Iranians continue to deal with the aftermath of deadly floods across the country and the government scrambles to provide relief, the need for a natural disasters insurance fund is once more deeply felt.
Since mid-March, massive floods have hit 26 of Iran’s 31 provinces, leaving at least 70 dead. They have forced evacuations, ravaged infrastructures, and incurred heavy losses on the agriculture sector.
The government of President Hassan Rouhani has been mounting relief efforts, enlisting the help of the cash-strapped banking system in the form of cheap or interest-free loans.
The growing but underdeveloped insurance sector has also quickly started reimbursing for damage, while municipalities in some areas hit hardest by the floods provided insurance coverage for local citizens.
However, as might have been predicted under current harsh economic conditions amplified by US sanctions, the annual budget was never going to be enough to cover the hefty damages.
Left with no other choice, officials are mulling withdrawal of as much as two billion euros ($2.25bn) from the country’s already strained sovereign wealth fund.
This has suddenly revived a long-standing discussion surrounding the formation of a nation-wide natural disasters insurance fund and whether Iran’s response to the floods would have been different if such a fund had been in place.
“I call on all relating entities to regard the bill to establish a natural disasters insurance fund much more seriously as it can be very consequential,” Gholamreza Soleimani, head of Central Insurance of Iran, said in a speech last week.
“The recent floods are a serious warning for occurrence of natural disasters in the country and the more serious measures that need to be adopted to contain them,” he said.
The idea of establishing such a fund was first floated 16 years ago. It has since been going back and forth within Iran’s complicated and time-consuming legislative apparatus.
