State-owned Iran Insurance Co. is expanding its activities in the petroleum industry as it fills the gap left by the inaccessibility to foreign insurers due to sanctions against Iran’s nuclear energy program, said the company’s CEO, Mahmoud Amrollahi.
The insurer is working to increase its presence in oil, gas, refining and petrochemical industries, as it seeks to cater to the Iranian petroleum industry’s risk management needs, Amrollahi told the press on Monday.
Iran’s largest insurer plans to underwrite operations in Iran’s shared oil and gas fields. “We have no limitations in working in shared oil and gas fields, and by cooperating with other companies we can increase our role in the industry,” Shana quoted the CEO as saying.
Out of Iran’s 145 oil and gas fields, 23 hydrocarbon fields are shared between Iran and its neighbors, including Kuwait, Iraq, Qatar, Bahrain, UAE, Saudi Arabia and Turkmenistan. The National Iranian Oil Company (NIOC) is aiming to increase investment in these fields.
“Iran insurance is active in large petroleum industry projects,” said Amrollahi, “and it has insured facilities and projects by forming consortiums with other companies.”
The insurer, which is enjoying a dominant position in the industry, has taken 50 percent stake or even more in the petroleum industry’s insurance contracts, while the remaining stake is covered by other insurers in the consortiums.
Iran Insurance is one of the largest insures in the Middle East. It has expanded its operations after sanctions were leveled against Iran’s financial system, cutting off access to foreign insurers who traditionally insured Iran’s heavy industries, as it filled the gaps in the insurance market. The insurer now controls 65 percent of Iran’s maritime insurance market.
Moreover, the insurance market as a whole has shown resilience to international sanctions against Iran’s nuclear energy program. Iran is currently in negotiations with the US, Russia, China and three EU member states on a comprehensive nuclear deal, which would lift sanctions in exchange for Tehran addressing western concerns over its nuclear activities. Those talks, already extended twice, are due to conclude by June 30.
Iran’s oil industry has been one of the hardest hit by economic warfare after the United States and the European Union tightened sanctions in 2011 that targeted the country’s oil exports.
Western sanctions continue to affect foreign investment in Iran’s energy sector, limiting the technology and expertise needed to expand the capacity at oil and natural gas fields and reverse production declines.
Equity in Equities
Iran Insurance is also actively investing in stocks, said the CEO. It has invested eight trillion rials ($231 million) in Tehran’s equity markets and is a stakeholder in Capital Market Stabilization Fund – established to counter volatile price moves in equities.
Clients’ Claims
“Iran Insurance paid 41 trillion rials ($1.18 billion at market rate) in insurance claims,” Amrollahi said, half of which was compensation for Compulsory Motorists’ Third Party Insurance cases.
Two of the insurer’s main cases this year were the payment of $3.9 million to Iran Aseman Airlines to cover the airline’s loss in revenue due to an airplane’s inactivity after a runway accident, and the 500 billion rials ($14.4 million) as flood compensation to Tehran Urban & Suburban Railway Operation Co.
