Head of the Central Insurance company of Iran says domestic insurance firms are providing cover to oil tankers and marine and aviation transportation sectors.
Gholam Reza Soleimani said CII contributed to the process by empowering domestic insurers after the second round of US sanctions cut off Iran from the International Group of P&I Club.
In July Iran proposed to insure oil cargo to India after Indian insurers stopped the service in the face of impending US sanctions, a move that helped Tehran continue supplying its second biggest oil customer.
Iran had previously faced similar problems in insuring its oil tankers and ships when the previous round of international sanctions took effect before the 2015 nuclear agreement with the six world powers.
The US re-sanctioned Iran on Nov. 4 imposing stringent penalties, including bans on insurance cover from international reinsurance companies to Iranian oil tankers, eased as part of the Joint Comprehensive Plan of Action.
European and US reinsurers dominate the global market and are increasingly wary of the risk of breaching US sanctions.
In this regard, Masoud Polmeh, a spokesman of the Shipping Association of Iran, said after the imposition of the first round of US sanctions on the shipping industry, two insurance companies, namely Qeshm and Kish companies, provided coverage for carriers and helped import/export of goods.
"But unfortunately, following the nuclear agreement these two insurance firms were ignored and over time their financial clout diminished."
$105m Profit in 2017
Soleimani said local insurers reported 12 trillion rials ($105.3 million) in profits in fiscal 2017-18 -- a sign that insurance business was on the growth path.
Insurance companies are financed by shareholders and almost all of them have increased their capital, Soleimani told the state TV. "But two companies are facing some problems and their shareholders have been notified."
He said the solvency of insurance companies - their capability to cover exposed risks – is seen in terms of figures and larger figures indicate weaker solvency. Solvency for eight companies is two, one company four, and the rest 1, he said.
Majlis Wants VAT Waivers
The Majlis Economic Commission is working on measures to remove value-added tax on insurance premiums, said Mohammad Reza Pour-Ebrahimi, chairman of the commission. "We are calling for VAT exemption on the insurance industry and the final draft of a report by the commission will be presented to the open session next week," the MP said.
Soleimani said premium fees will be reduced by implementing VAT exemption policies, noting that VAT accounted for 29% of the total premium of the 340 trillion rial ($2.9 billion) sales in 2017.
Bitter Rivalry
From the 32 active insurance companies in Iran four are in the red, Soleimani said. "There is a bitter rivalry among insurance companies for reducing premium fees, which in turn has undermined their ability to pay claims.”
Accordingly, some measures have been adopted by the regulator to limit discounts a company can offer. "For example, insurers are allowed to offer not more than 2.5% discount on third-party motor insurance"
He said there is effective oversight by the CII on the performance of insurance companies and speiucal supervisory committees rank current and prospective loss-making companies according to their performance. Underperforming companies face penalties.
