With 14 new reinsurance companies emerging around the time the US re-sanctioned Iran, capacity of the reinsurance industry expanded by 9.2 trillion rials ($80 million), enhancing its ability to counter the illegal US restrictions, a senior insurance official said Tuesday.
“Fourteen new companies have been added to the existing eight in the reinsurance business to help widen risk in insurance coverage ", Gholam-Reza Soleimani, head of Central Insurance of Iran told the 25th National Conference on Insurance and Development held in Milad Tower in northwest Tehran.
"Issuing insurance-linked securities in the capital market is on the CII agenda to further bolster reinsurance coverage,” he was quoted as saying by IRNA. The measure is approved by CII, the Securities and Exchange Organization and its Islamic Jurisprudence Committee, he said.
Soleimani reviewed the performance of the insurance industry by comparing data from 2017 with 2016 figures. He said insurance companies generated 340 trillion rials ($2.9 billion) from premiums in 2017, up 20% compared to the year before. Also, insurers paid a total of 210 trillion rials ($1.8 billion) in claims last year, up 16.5% compared to one year earlier.
In addition, the insurance density for each policy holder was about 4.2 million rials ($36.5) and insurance penetration was 2.3% in 2017. Also loss ratio was 83.5 % in the last year witnessing a slight increase to record 83.4% in 2016. Furthermore, the number of insurance policies issued increased by 12% in 2017 of which private insurance companies had the larger share.
Supporting the Production Sector
Beside the challenges of forex rate fluctuations, the key production sector is also grappling with the risk of collateral damage, Farhad Dejpasand, the economy minister told the conferees. Covering collateral damage may not be attractive for the insurance industry "but this is an established practice around the world and global insurers have devised viable solutions to cope with it".
He said insurers may take measures to cover production losses at a time when producers are grappling the problems related to the supply of raw materials.
Dejpasand called for the securitization of insurance bonds noting that this would be helpful both for the insured and insurance industry in the US sanction season.
He rejected reliance on mandatory insurance to enhance insurance penetration and called for innovative ideas to increase company revenues.
President Donald Trump re-imposed economic sanctions after pulling out of the landmark Iran nuclear deal in May. The latest restrictions came into effect on November 5, hitting Iran’s vital oil exports and banking sector. The sanctions led to a 70% plunge in the value of the national currency, over the past eight months.
