Government to Phase Out Paper Insurance Policies Starting September 1
Starting from October 2025, significant changes are set to take place in the insurance industry, with an increase in the minimum amount of authorized capital for insurers. This announcement comes as part of a series of reforms aimed at improving efficiency and transparency within the sector.
One of the key changes to note is the abolishment of issuing insurance policies solely in paper form, starting from September 1. Instead, all registration of insurance contracts and issuance of insurance policies will now be conducted through the Unified Automated Information System, as per a presidential decree issued on March 1. Failure to comply with this new regulation can result in the invalidation of insurance policies, marking a serious violation of licensing requirements for insurance organizations.
In a move to enhance consumer protection and promote healthy competition, the National Agency for Advanced Projects (NAAP) will begin publishing ratings of insurers based on the quality of services provided. Additionally, the NAAP will oversee the introduction of compulsory insurance contracts for various categories, including civil liability of employers and carriers, civil liability for accidents at hazardous production facilities, and construction risks.
Furthermore, new insurance products such as Takafful and Green Insurance will be popularized, while compulsory insurance of real estate against man-made and natural disasters will also be mandated. Moreover, there will be a gradual increase in the minimum amount of differentiated authorized capital of insurance companies over the next five years.
To further boost competition within the insurance market, international standards for calculating insurance reserves and determining solvency will be adopted. Licensing requirements for insurance activities will be strengthened, including the mandatory presence of information systems. Additionally, minimum insurance tariffs will be recommended for voluntary insurance contracts, and revisions will be made to insurance rates for compulsory civil liability insurance of vehicle owners.
These reforms come in response to calls for a more level playing field within the insurance market, as highlighted by the Senate of Oliy Majlis in December 2023. The aim is to address concerns about certain companies holding a dominant position and potentially violating competition laws. By implementing these changes, the hope is to create a more transparent, competitive, and consumer-friendly insurance sector for the future.
