Push for Reinsurance Reform

Reinsurance industry’s representatives have sent a letter to Abdolnasser Hemmati, the head of Central Insurance of Iran, urging him to stop other insurance companies from being active in the reinsurance sector, the chief executive of Amin Reinsurance Company said.

“Accepting reinsurance services from general insurance companies is nowhere customary in the world because it causes a conflict of duties and ultimately leads to a violation of premium rates and lack of optimized risk evaluation,” Seyyed Mostafa Kiaei was also quoted as saying by Risk News.

The official, who was speaking in a press conference, added that the foray of general insurance companies into the reinsurance sector takes it out of its specialized context and makes it less valuable.

While negotiations with CII have yet to yield results, the chief executive said he remains hopeful that general insurance companies would not be able to renew their reinsurance licenses next year so that more investments can be attracted to the market.

Stopping general insurance companies from entering the reinsurance market would help prepare the Iranian industry’s entry into international insurance markets.

“If we want foreign insurance companies to enter the Iranian market, it is necessary to take a second look at the structure of premiums because it must be reformed,” he added.

As to other challenges facing the Iranian reinsurance industry, Kiaei spoke of the neglected capacity and the low potential of specialized reinsurance firms.

“Iran Insurance Company and CII handle the bulk of reinsurance activities in Iran,” he said, adding that reinsurance companies themselves have larger capacities than their state-owned rivals.

Reinsurance representatives have been in correspondence with CII officials and officially called on them to seek a solution as “reinsurance work is for reinsurance companies and nowhere in the world do insurance companies engage in reinsurance activities”.