The government expects the Central Insurance company of Iran to strengthen its supervision of the insurance market and follow through the reforms initiated by the regulatory body’s previous head, Economy Minister Ali Tayyebnia said at a ceremony inaugurating new CII president on Wednesday.
“The regulator should seek to further lowering quota share reinsurance (mandatory reinsurance premium share paid by insurers), as the previous administration managed to reduce to percentage from 25 to 15% for non-life policies and from 50 to 25% for life insurance policies,” Risknews quoted him as saying.
Under the mandatory reinsurance regulations, all insurance companies in Iran are obliged to pay a percentage of their premium from direct life and non-life business to the regulatory body and transfer some of its liabilities to the reinsurer.
Tayyebnia also urged the regulator to define a new role for the Iran Insurance Company, the giant state-owned insurance firm. “IIC should play a complementary role in the market with a focus on innovation.”
Reinsurance Business
Abdolnasser Hemmati, the new CII chief said mandatory reinsurance is a key tool to regulate the market, even though it is considered a “commercial undertaking.”
Central Insurance of Iran’s mandatory reinsurance business has been a subject of controversy among the industry’s stakeholders, with some accusing the body of interference in the market. The former head of the CII, Mohammad Ibrahim Amin, had plans to transform the reinsurance wing into a separate entity under a so-called National Reinsurance Company.
“The CII needs the reinsurance business; since there are no other proper tools for managing the industry. I think more time is needed before ending the mandatory reinsurance,” he said.
He complained that an oil-dependent economy has stunted the progress of the insurance sector. “The low penetration rate of life insurance, is another major factor for the industry’s lackluster performance.”
Life insurance penetration rates is said to be around 6%-7% in Iran.
Tayyebnia earlier this month appointed Hemmati, former CEO of Bank Melli Iran, to head the CII after its former chief was forced to stand down in the wake of a salary scandal. Tayyebnia later defended Amin, saying he had been cleared of any wrongdoing after extensive probes into the CII books.
Hemmati has announced that promoting private insurance firms and enhancing relations with the media are among his priorities.
Hemmati had previously worked as head of CII for more than a decade (1994-2006). He played a key role in launching private insurance companies and privatizing major insurance firms such as Alborz, Dana and Asia.
