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Dr. Hemmati at Euromoney Iran Conference 2018:
Abundant Investment Potential in Iranian Insurance Industry
At Euromoney Iran Conference 2018, Dr. Hemmati, the President of Bimeh Markazi Iran (Central Insurance of IR Iran), accentuated the readiness for fostering communication and collaboration of local insurers with international counterparts, on the basis of mutual interest.
Attended by a number of senior officials including Dr. Nili, Economic Advisor to President Rouhani, Dr. Abbas Araghchi, Deputy Foreign Minister, Mr. Zamaninia, Deputy Oil Minister, along with top executives of state and private banks, the conference witnessed remarks of Dr. Hemmati on privatization process saying, “Since the ratification of the law for non-governmental insurance companies in 2001 and selling the governmental insurance share to private sector in 2008, the Iranian insurance market has moved from state monopoly towards a competitive market.”
The Head of High Council of Insurance (HCI) also highlighted detariffing, omitting tariff-based regulations, establishing financial solvency supervision system for insurance institutions, updating insurance regulations and adapting them to international norms and standards, launching electronic supervision systems for insurance market and defining unique codes for insurance policies, establishing corporate governance and compiling pertinent regulations, mobilizing fresh and educated workforce, upgrading the quality of human resources in insurance industry
Moreover, Dr. Hemmati deemed JCPOA crucial in insurance industry and stated, “After JCPOA, the Iranian insurance industry experienced important changes. During sanctions, the rate of reinsurance ceding outside Iran considerably dropped and plunged to less than one percent, but the trend was reversed after JCPOA and it is continuously being improved. This is especially true since the contribution of the large European reinsurer, SCOR, in excess of loss reinsurance contract. On the other hand, almost 70 percent of oil tankers and 45 percent of ships in Iran managed to obtain insurance coverage from International Group of Protection and Indemnity Clubs (IGP&I). Moreover, ships under the coverage of Iranian P&I are allowed to sail across European harbors.”
Besides, as a supervisory body supporting the rights of the insured, Bimeh Markazi Iran (Central Insurance of IR Iran) is willing to encourage and assist local insurers with any interactions and transactions with international counterparts on the basis of mutual interest fulfillment and in compliance with supervision standards.
Thus far, there has been no record of ceding in the realm of life insurance in Iran. After JCPOA, parallel with its policy of international collaboration reinforcement, Bimeh Markazi allowed one of the local insurers to sign a ceding contract with one of the globally eminent reinsurer in the field of life insurance, for the purpose of sharing expert knowledge and cultivating human resources. This mirrors strong will of Bimeh Markazi for the enhancement of global communication in insurance industry.
The President of Bimeh Markazi expressed that Iranian insurance industry enjoys abundant intact capacity appealing to foreign investors. Iranian capital stock estimated to be involved in risks of about USD 3000 billion; in other words potential demand and supply of risk coverage in our national economy is over 3000 billion dollars, less than 30 percent of which is currently under coverage. Only 13 percent, i.e. three million and 140 thousand out of 25 million cars are under coverage countrywide. Besides, 14.2 million out of 80 million individuals in Iran hold life insurance, i.e. 18 percent and 16 percent of people enjoy supplemental health insurance, i.e. 12.4 million of the Iranian population. From 25 million residential units, only 11 percent is insured, and below seven percent of all residential units nationwide are under earthquake coverage.
Other major construction projects include various structures, power plants, upstream and downstream industries, oil, gas, and petrochemicals and low risk markets.
Over the last 20 years, insurance penetration rate has been constantly rising. Iranian insurance industry has experienced 4.5 times more growth than the total of national economy during this phase. All of such indicators imply high potential of national industry for investment development.
Dr. Hemmati considered the growth in national insurance industry potentially high, and uttered that a number of brokers and reinsurers have already initiated establishing their contact offices in Tehran. Foreign natural and legal persons are allowed to possess 49 percent of Iranian insurers’ share. Low loss ratio of insurance classes that have less developed in the society indicate considerable potential for foreign investment in Iranian insurance industry. Undoubtedly, the enhancement policy of Dr. Rohani targeting negative economic growth during the last years, paves the way for positive growth which itself contributes to ever-increasing potential for insurance development.
In view of that, alternatives to foreign investment in Iranian insurance industry include buying local insurers’ shares, establishing branches or contact offices, and forming reinsurance brokers. Bimeh Markazi is absolutely determined to help foreign dynamic insurers and reinsurers along with investors expand their business in Iran.
22:29 - 08/02/2018 / Number : 3063 / Show Count : 971