Majlis will debate a plan to divide the supervisory and executive duties of the insurance industry’s regulator in the next five-year development plan, according to a lawmaker.
“The sixth plan envisions a larger market share for private insurers’ which requires reforms in the industry’s supervisory body,” Risknews website quoted Muhammad Hussein Mirmohammadi as saying on Sunday.
Central Insurance company of Iran has been acting as the regulatory body of the insurance industry since its establishment in 1971, but it is often criticized for its commercial activities in the market especially in the reinsurance sector.
The MP noted that the government’s economically dominating role is a major hurdle the country’s financial markets are facing. “The government’s presence in the insurance market is rather significant.”
According to CII statistics, Iran Insurance Company as the sole state-owned firm accounts for 44% of the total premiums, while the rest is divided between 30 private companies.
He added that the private sector can and should promote competition in the market and enhance the quality of insurance services.
“Insurance plays a key role in fostering business activities in the economy,” Mirmohammadi noted, and said, “By covering economic risks they could help stimulate the economy and attract investment.”
Noting that the insurance sector should offer a more comprehensive coverage through innovative services, he called on the sector to “emerge from the periphery and assume a more active role.
Transparency
The legislator pointed to Parliament’s probe into insurance firms and said, “Such investigations help improve transparency in the industry. The main purpose of such inquiries is to enhance the industry rather than find faults.”
The Majlis Insurance Investigation Commission has been looking into the balance sheets of insurance firms of the last six years to determine their performance and validity.
Reinsurance Company
Central Insurance of Iran’s “compulsory reinsurance” business has sparked many disputes, accusing the body for interference in the market, the lawmaker said.
The CII president said Saturday that the central insurance’s office for reinsurance would be designated as a separate entity under the national reinsurance company.
“The national reinsurance firm would be a government company first, though the government may later decide to transform it into a private company,” Muhammad Ibrahim Amin was quoted as saying.
“The separation process would be easy as each department in CII has its own independent structure,” he said.
But market observers have opposed the move because they say such an entity not only would fail to solve the insurance industry’s fundamental problems but would also turn into another obstacle for the industry in the long-run.
