Economy Minister Ehsan Khandouzi has asked the new head of the Central Insurance company of Iran to end reinsurance operations.
"CII's involvement in the reinsurance sector may be a wise decision in the current economic conditions saddled with international sanctions…However, the CII must consider stopping reinsurance activities to help support growth of the sector," he was quoted as saying by Fars News Agency in a meeting to introduce the insurance regulatory body's new head.
Majid Behzadpur has been appointed the new CII boss months after the resignation of Gholamreza Soleimani. Behzadpour is a former head of the Bodily Injury Indemnity Fund, affiliated to the CII, which compensates bodily injury in different insurance sectors.
He has held key positions at the CII, namely as deputy for resource management plus deputy for financial affairs.
Iran’s insurance companies cover nearly $500 billion worth of risks. This is while most risks are covered by local firms, including reinsurance companies, insurance companies and the CII.
As per the regulations, the insurers are obliged to cede 15% and 25% of all their non-life and life insurance premium income to the CII for reinsurance needs.
CII reinsurance business is also set to support the sector against risks that could pile up losses due to the US sanctions and in the absence of foreign peers.
US economic sanctions and major reinsurance companies' aversion to do business in Iran have deprived the country of the ability to transfer major risks outside its borders to international players.
Reimposition of the US economic blockade in 2018 plus growing demand for reinsurance, prompted investors to rise to the occasion. The CII announced earlier that it had received 30 applications for setting up insurance and reinsurance firms.
Saman Reinsurance Company was given a license and will make a debut soon. It will be Iran's third reinsurer. Pars Reinsurance Company, affiliated to Parsian Bank, is the fourth to acquire a permit. Tehran Re also is getting ready to start operations in near future as the fifth reinsurance firm.
Other Targets
Reforming regulations in collaboration with experts, devising plans to foster technological development and enhancing the process of data collection from insurance companies are said to be the key sector's priorities under the Raisi administration.
Khandouzi also asked CII head to accelerate innovation and digitalization of the sector.
Behzadpour talked about expanding and improving the sector, in which smartization is to play a key role. "Developing smart platforms can boost the efficiency of process and is on top of our schedule," he said.
"We also want to use new technology to diversify insurance products and by extension increase the penetration rate of this industry."
CII was founded in 1971 for the purpose of regulating, expanding and guiding insurance companies in Iran. Parallel to its regulatory and supervisory role, it receives a compulsory share from insurance companies and conducts both inward and outward reinsurance business in the domestic and international markets.
