The Central Insurance company of Iran announced the risk retention and reinsurance capacity for insurance companies.
According to data published by the CII website, the main state-owned Iran Insurance Company is ranked first in terms of risk retention capacity and can accept risks worth at 18.61 trillion rials ($141.5 million).
It is followed by Asia and Alborz insurance companies, in both of which the government has a stake, with respective risk retention capacities of more than 3.5 trillion rials ($26.7 million) and 3.14 trillion rials ($23.9 million) respectively.
Parsian and Dana insurance companies are among the top five list with capacities of more than 2.49 trillion rials and 2.26 trillion rials respectively.
Risk retention in insurance industry refers to the amount of risk that an insurance company is willing to pay for a policy, risk, or group of risks.
The more risk an insurance firm assumes by underwriting new insurance policies, the more premium it collects and later invest. When an insurer accepts additional hazards through the issuance of policies it elevates the possibility of insolvency.
A company's risk retention capacity, or the maximum amount of acceptable risk, is a crucial component of its operations.
The capacities announced by the CII are based on balance sheets of insurance companies to June 2.
Six in the Game
Apart from the two specialized firms in the reinsurance sector, namely Amin Re and Iranian Re, only four insurance companies, including Iran Insurance Company, Pasargad, Mellat and Iran Moein, are allowed to accept reinsurance risks.
The state-run ICC is once again at the top with a capacity of 9.30 trillion rials ($70.78 million) in reinsurance coverage.
Pasargad reinsurance cap was set at 777.72 billion rials and Mellat came third with a capacity of 698.37 billion rials.
As the final insurance company allowed to offer reinsurance services, Iran Moein is permitted by the CII to accept up to 440.42 billion rials in reinsurance cover.
Amin Reinsurance Company and Iranian Reinsurance Company can provide reinsurance up to 914.89 billion rials and 620.62 billion rials respectively.
Reinsurance is the practice whereby insurers transfer portions of their risk portfolios to other parties in some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim.
It allows insurers to remain solvent by recovering some or all amounts paid to claimants.
The insurance industry regulator has advised insurers to consider the level of financial strength of peers as announced by CII when considering the allowed risk retention cap.
THE CII allows the government supervision power over the insurance sector and is responsible for regulating, guiding and expanding insurance activities in Iran. Guiding insurance companies and protecting the insured and their beneficiaries is among its key tasks.
