Iranian insurance companies are working to develop an integrated insurance market platform, to help insurers efficiently transfer risks to reinsurance companies.
The integrated market is expected to help insurers offer rational rates when buying reinsurance cover. It is also designed to help improve transparency of reinsurance deals and enhance competitiveness.
A private institution is to be established for running the market without direct involvement of the Central Insurance company of Iran -- the top regulatory body. The CII has welcomed the move and expressed readiness to support insurers launch the market.
"We welcome such a market but have no intention to interfere in rates," said Gholamali Jahangiri, head of the CII office for reinsurance.
"An integrated market will create an opportunity for both sides forge an agreement on rational rates for buying services…it also will help institutionalize international standards despite the [US] sanctions," he said.
After the market is established insurers will be able to purchase reinsurance cover for any insurance policy quickly, he added, noting that so far buying cover for re-insurance companies was time consuming.
US economic sanctions and major reinsurance companies' aversion to do their fair share has deprived the country of the ability to transfer major risks outside its borders to international players in the key sector.
Only two reinsurance companies operate in the Iranian market, namely Amin Re and Iranian Re. A limited number of insurance firms have permits from the regulator to enter the reinsurance industry. Experts say loopholes and poor regulations are depriving the reinsurance industry from playing its role.
Amin Reinsurance Company and Iranian Reinsurance Company can provide reinsurance cover up to 914.9 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 large amounts emanating from an insurance claim. It allows insurers to function by recovering some or all the amounts paid to claimants.
CII allows government supervision over the insurance sector and is responsible for regulating, assisting and expanding the industry.
Iranian insurance companies cover nearly $500 billion worth of risks, according to officials. This is while risks of almost all types are covered by local firms, including reinsurance companies, insurance companies and the CII.
