Deadbeat Carmaker on Wrong Side of Insurers
EghtesadOnline: Insurance companies have stopped offering third party vehicle insurance to new vehicles produced by SAIPA, Iran's second-largest automaker, due to the carmaker’s pattern of failure to settle its mountain of debts.
Head of Iran Insurers Syndicate, Mohammad Alipour, said SAIPA’s debts to insurers climbed to 11 trillion rials ($86 million) in the past two years, IRNA reported.
The arrears are related only to matured debts of the auto company and do not include debts with maturity dates in the future.
Alipour castigated the poor performance of the controversial carmaker, saying it refuses to repay debts to insurance companies despite the fact that it charges car buyers in advance for the insurance and before the car is delivered, Financial Tribune reported.
“SAIPA demands its customers pay the premium in advance. It keeps the money for itself [instead of paying its dues to the insurers and other parts suppliers].”
Insurers’ financial demands on SAIPA exceed the total annual profits of all insurance companies in Iran, he said in a rare revelation of the failures of the state-owned car company that has come under fire from customers for years but strangely refuses to change its ways of producing low-quality cars at high and rising prices.
Alipour revealed that the insurance companies had forged several agreements with the SAIPA management to clear its piling debts but to no avail.
Third party vehicle insurance is mandatory in Iran. It is essentially a form of liability insurance according to which, in the case of accident, the insurer is required to compensate the inflicted party for physical or financial loss according to the reimbursement ceiling set by the High Council of Insurance, affiliated to the Central Insurance Company of Iran.
The insurance policy is bought by the insured (first party), from an insurer (second party) for protection against claims by another (third party).
HCI raised premium rates and the reimbursement ceiling for third-party auto insurance by 15% in the current Iranian year (started March 21) compared to the year ago.
The new annual premium rates can range from 3 million rials ($24) to 84 million rials ($619) depending on the type of vehicle (cars, buses and motorcycles).
Regarding other carmakers, Alipour said all companies have met their financial commitments to insurers and suspension on selling third-party vehicle insurance applies only to SAIPA.
The senior official, however, noted that the firms continue issuing insurance policies to owners of new cars made by SAIPA.