Economy, Business And Markets

Insurance Sector Reforming to Attract Foreign Firms

Insurance Sector Reforming to Attract Foreign FirmsInsurance Sector Reforming to Attract Foreign Firms

Reinsurance, opening new branches, purchasing domestic insurers' shares and joint investments in the industry are among potential opportunities for cooperation with foreign firms, according to a senior official at the Central Insurance of Iran.

Rahim Mosadeq, CII deputy for planning and development, pointed to the ongoing talks with foreign insurers regarding investment in Iran's insurance industry and said that there would be changes in regulations for foreign insurance companies willing to join the industry, Fars News Agency quoted him as saying on Friday.

"Foreign insurers are allowed to buy up to 49% stake in our insurance companies or open branches in the country," he said, adding that foreign insurers can launch joint ventures or establish new ones, with 100% ownership of shares, in free trade zones.

The official sounded positive about the prospect of foreign companies' entering the huge domestic insurance market, hoping that their innovative services and experience would increase and improve competition.

Even during the sanctions there was some cooperation in the area of reinsurance with foreign firms, he added.

German, Japanese, British, French and Swiss insurance companies such as Munich RE, Tokio Marine, Sompo, Nasco and ECHO RE have made bids to enter the Iranian market after the lifting of the sanctions expected by early next year.

Foreign insurance companies like Lloyds and Munich RE, used to account for 80% of the reinsurance coverage in Iran before nuclear-related sanctions were imposed.  

With a premium value estimated at $9 billion, Iran is already one of the biggest primary insurance markets in the MENA region, according to Munich RE. For the period up to 2025, premium income is expected to grow by between 5% and 6% per annum on average after adjustment for inflation, yielding a premium volume equivalent to $9 billion.