The Iranian government has revealed plans to reduce protectionist measures which require local insurers to cede a percentage of premiums to be reinsured by the Central Insurance of Iran (CII), according to the Financial Tribune.
Under current regulation, Iranian insurers are obliged to cede 15% of all non-life and 25% of life insurance premium income, respectively, to the CII.
In a new five-year development plan the percentage is set to be gradually reduced til the end of 2022.
The director of the industry’s regulator, Abdolnasser Hemmati, said; “As part of the projections made in the Sixth Five-Year Development Plan (2017-22), the compulsory reinsurance share of insurance companies for non-life categories, which currently stands at 15%, will be reduced to 10% while the compulsory reinsurance share of life categories will decline to 20% from the current 25%.
“Reinsurance cession remaining with the CII after the Sixth Plan will be employed mostly as a tool for supervision,” the Financial Tribune reported.
UN sanctions were lifted on January 16th last year after the UN Security Council’s five permanent members and Iran reached a provisional agreement on a framework that would lift most sanctions in exchange for limits on Iran’s nuclear programmes, extending for at least ten years.
Since the easing of sanctions, negotiations between Iranian and global reinsurers and insurers have moved at a fast pace. This year a number of global reinsurers including Munich Re, GIC Re, and SCOR, have entered into reinsurance agreements in Iran.
In 2016, Lloyd’s and broking firm Ed were among the troupe of reinsurers seeking opportunities to renew lines of business.
Rating agency A.M. Best said Iran’s gross written premiums were at $7.5 billion in 2014, making Iran one of the biggest markets in the region.
However, according to A.M. Best’s latest report on the Middle Eastern market, despite certain sanctions recently being lifted and a number of European reinsurers having announced plans to re-enter the Iranian market, to date, none have made significant strides to provide capacity.
A.M. Best said the Iranian insurance market has “a significant conflict of interest that is not likely to exist in other insurance markets that have kept pace with global developments,” due to its country’s largest reinsurer, Bimeh Markazi, also acting as insurance regulator.
In addition, the Iranian market has been shrouded in geopolitical uncertainty causing reinsurers to demonstrate caution as they move into the region, with the Donald Trump administration having ordered a review of the lifting of the sanctions despite Iranian compliance with the relief agreement in April.
