The Central Insurance company of Iran (CII) has released a report on the risk retention capacity of domestic insurers adding three new companies to the list.
According to the CII website, the state-owned Iran Insurance Company topped the list and can handle 51. 3 trillion rials ($106.6 million) in risks in different categories.
Pasargad Insurance Company, affiliated to Bank Pasargad, was second with 19.8 trillion rials ($39.6m) worth of risks. Asia Insurance Company was next with 13.3 trillion rials ($26m) followed by Dana Insurance Company at 12.3 trillion rials ($24.6m).
Alborz Insurance Company, Mellat, Kowsar and Parsian insurance were the other insurers with acceptable risk retaining capacity.
Mihan Insurance Company, Charisma Life Insurance Company and Baran Life Insurance Company were at the lower end of the list. The latest risk retention capacity report is based on the balance sheets of insurers released on June 10.
The regulator of the insurance industry increased the risk retention capacity for Pasargad Insurance Company and Amin Reinsurance Company.
Tehran RE, Avaye Pars Reinsurance Company, Farda Smart Insurance and Charisma Life Insurance Company were added to the list after their recent debut.
Risk retention in the insurance industry refers to the amount of risk that an insurance company is willing to take on for a policy, risk or group of risks.
The more risk a company assumes by underwriting new insurance, the more premium it collects and invests. When an insurer accepts additional hazards it also increases the possibility of insolvency.
A company's risk retention capacity, or the maximum amount of acceptable risk, is a crucial component in its overall operations.
CII figures also include the capacity of reinsurance companies as per which Amin Re is in the lead with 3.52 trillion ($7m)
Iranian Re, affiliated to Bank Pasargad Iran was next with 3.38 trillion rials ($6.8m). Iran Moein Reinsurance Company ranked after with risk capacity of 3.33 trillion rials ($6.6m).
Iran Moein recently got permission from the regulator to move from a general insurance company to reinsurance business.
Avaye Pars Reinsurance has been allowed to accept up to 874 billion rials ($1.7 million) in risks and Tehran Re 520 billion rials ($1.04m).
The recently founded Saman Re is allowed to accept risk of no more than 379 billion rials ($758,000), the lowest in the market.
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 claims. It allows insurers to remain solvent 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 key industry.
