Corporate Governance Bylaw for Insurance Industry

The new bylaw on corporate governance in Iranian insurance companies has been devised and will be implemented soon, announced the president of Central Insurance of Iran.

"One of the most important actions of the insurance industry to support shareholders concerns corporate governance, the ordinance for which has been readied and is expected to be decided upon in Sunday's meeting of the High Council of Insurance, so that we can start executing corporate governance in all insurance companies," Abdolnasser Hemmati was also quoted as saying by IBENA.

The official, who was speaking at the 10th International Exhibition of Exchange, Bank and Insurance at Tehran's international permanent fairgrounds, said Iran's nuclear accord with world powers has had tangible results for the insurance sector.

"I have met with players of all European insurance entities and they have expressed readiness to invest in the Iranian insurance sector, which they will in the next two to three months," he said.

According to the law, Hemmati added, foreigners can purchase up to 49% of the shares of Iranian insurance companies, which heralds "a good year for the insurance sector".

In mid-January, the industry regulator CII published a report announcing that it has held talks with more than 140 foreign insurance and reinsurance companies that seek to enter the Iranian market. They include German, British, Swiss, French and Japanese firms, including Munich Re, the world's top reinsurance company.

Hemmati said insurance companies currently play a minor role in the development of the country and must therefore be strengthened, noting that insurance in the developed world purchases up to one-third of long-term bonds, "but the value-added role of insurance is small in our country".

Because of high interest rates in Iran, he added, life insurance could not grow but in spite of this "we witnessed a 40% growth in life insurance and the share of life insurance is to grow by 50% by the end of the sixth five-year development plan".

Stressing that the role of the capital market and insurance market must be empowered, Hemmati said measures undertaken in the current administration have led to the penetration rate of the insurance rising above 2% for the first time.