Iran’s Risk Coverage Potential at $3 Trillion

EghtesadOnline: Iran has a risk potential of over $3 trillion that can be covered by insurance, the Central Insurance of Iran’s vice president announced.

News ID: ۷۷۹۷۱۶

15 October 2017

“Not more than 30% of the risks in Iran’s economy have so far been covered, which leaves 70% of the country’s assets uninsured,” Parviz Khosroshahi was also quoted as saying by IBENA.

He noted that after the implementation of the Joint Comprehensive Plan of Action (the formal name of Iran’s nuclear deal with world powers), more than 70% of Iranian oil vessels and 45% of shipping fleet have been covered by International General Insurance Company while Iranian ships that regained protection-and-indemnity cover from Steamship Mutual can now cruise in European countries’ ports.

More than 50 of the Islamic Republic of Iran Shipping Lines’ fleet have entered the International Group of P&I Clubs that was a key insurer of the Iranian fleet before sanctions ended the relationship in 2009, according to Financial Tribune.

IRISL was the first shipping line to be targeted by sanctions on Iran, when British and American officials claimed the company’s ships had carried cargo that assisted the country’s ballistic missile and nuclear program.

According to CII’s vice president, out of 25 million cars in Iran, only 3.14 million or 13% of them are covered by vehicle policies. He added that from among the 80 million population of Iran, only 14.2 million or 18% have life insurance policies while the number of people who use supplementary health insurance does not exceed 12.4 million or 16% of the population.

“In the past 20 years, Iran’s insurance industry growth has been 4.5 times higher than the country’s overall economic growth, which indicates the industry’s high capacity for investment,” he added.

He noted that the Iranian insurance industry’s penetration rate has been steadily increasing in the past 20 years so it seeks to attract foreign investments for further development of the industry and not necessarily for assigning the risks to foreign insurance firms.

“Limited financial and technical resources, especially those related to assessing and managing risks after accepting them, are the biggest issues hobbling the insurance industry’s prosperity,” he said.

Khosroshahi mentioned poor insurance culture among the public and the government’s outsized role in the industry as other obstacles that prevent the insurance industry from attracting foreign investments.