Document Type : Original Research Paper
Author
Master, Department of Law, Faculty of Humanities, Islamic Azad University, Tehran Branch, Tehran, Iran.
Abstract
BACKGROUND AND OBJECTIVES: With the increasing frequency and severity of natural disasters such as earthquakes, floods, storms, and wildfires, the need for effective and efficient insurance coverage to compensate for damages to individuals and property is increasingly felt. In many countries, including Iran, natural disaster insurance is recognized as a key tool for risk management and reducing the financial burden of such disasters. However, numerous challenges in the field of natural disaster coverage, including the limitations of the insurer's responsibilities and obligations, weaknesses in insurance contracts, and the like, can affect the efficiency of insurance systems. Therefore, the main objective of this study is to identify the responsibilities of insurers in fulfilling their obligations and paying for damages resulting from natural disasters and the related challenges.
METHODS: To analyze the responsibilities of insurers for damages caused by natural disasters, existing legal texts, including jurisprudential, legal books, and published domestic and foreign articles, were studied. Accordingly, the method of this article was library-based, analytical, and descriptive. First, the jurisprudential and legal foundations and the responsibility of insurers for damages caused by natural disasters were examined, and then the provision of insurance services and the legal challenges faced by insurers in paying damages caused by natural disasters in various countries, including Iran, the United States, the United Kingdom, France, and some other countries, were analyzed.
FINDINGS: The analysis reveals substantial legal and operational disparities in how insurer liability for natural disasters is legislated and implemented. In Iran, while Articles 19 to 22 of the Insurance Law stipulate that the insurer's fundamental obligation is to compensate for damages incurred based on the specific terms stipulated in the contract, this framework is often inadequate due to its optional nature regarding comprehensive disaster coverage. Despite the existence of Article 953 of the Civil Code (concerning force majeure) and ongoing legislative efforts to expand the scope of insurance coverage, catastrophic damages resulting from major natural disasters still fail to receive adequate and full compensation under the current general insurance framework, primarily due to the ambiguity regarding coverage exclusions and the non-mandatory nature of comprehensive natural disaster policies. A significant procedural hurdle in Iran is that the burden of proof for the occurrence and causality of the incident lies squarely with the policyholder, a requirement that often prolongs and complicates the damage payment process, leading to consumers’ dissatisfaction and increased litigation. This contrasts sharply with developed countries, where legislative frameworks are designed with a stronger emphasis on consumer protection and streamlined claims processing. In countries like France and the United States, laws mandate contract transparency and strategically shift the burden of proof to the insurer, thereby facilitating the damage payment process considerably. Furthermore, in these leading countries, the occurrence of major disasters is frequently verified by official government documents (e.g., presidential declarations or ministerial decrees in France), which automatically trigger claims processing and eliminate the need for complex and independent proof by the policyholder. The legal philosophy in these jurisdictions often dictates that insurer obligations include compulsory disaster insurance as a basic coverage component, thereby creating a minimum floor of protection. For instance, Japan operates a specialized, partially state-backed earthquake insurance system, which ensures the continuity of coverage despite unique seismic risk. Additionally, the Natural Disaster Insurance Fund (NDIF) in Iran currently operates under severe constraints, collecting low premiums and relying heavily on government-supervised support services, which frequently encounter both financial and implementation challenges. Conversely, in the United States, Japan, and France, commercial disaster insurance is highly developed, operates under strict governmental oversight (e.g., through reinsurance pooling or state guarantee mechanisms), and adheres to established global standards and rapid claim settlement protocols, which translates into much faster, fairer, and more transparent claims payments to the affected populace.
CONCLUSION: Iran's existing legislative and regulatory approach to natural disaster coverage is characterized by a significant structural difference compared to developed countries such as the United States, France, and Japan. The model in Iran is heavily reliant on a dominant governmental role in providing disaster compensation and support, with the private insurance sector playing a comparatively smaller, and often supplemental, role. This disproportionate reliance on state intervention creates systemic vulnerabilities. To dramatically improve the status of natural disaster coverage and enhance societal resilience, comprehensive reform is recommended. Key necessary steps include: reforming general insurance laws to mandate clearer inclusion of natural disaster risks and eliminate coverage ambiguity; providing stronger legislative and procedural support for insured individuals by reversing the burden of proof; establishing clear and unambiguous definitions of insurer obligations and exclusions in policy language; and, crucially, strengthening the role and capacity of the private sector through public-private partnerships, mandatory reinsurance mechanisms, and regulatory incentives to increase premium collection and market penetration. Learning from the robust, multi-layered risk-sharing and swift compensation experiences of best practices like France (CatNat model) and Japan (specialized risk pooling) can provide the necessary blueprint to improve claims processes, reduce existing structural problems, and ensure timely financial recovery for policyholders.
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