Mohammad Rezaee said Iran’s largest insurer would be the top insurer in the Middle East in terms of risk retention if it could meet the target.
“It should be noted that risk retention capacity of IIC doubles the whole insurance portfolio of Oman,” IBENA quoted him as saying.
According the latest report by Central Insurance company of Iran, the risk retention capacity of IIC currently stands at 18.61 trillion rials ($163 million), Financial Tribune reported.
Risk retention in the insurance industry refers to the amount of risk that an insurance company is willing to pay for a policy, risk, or group of risks. The more risk a company assumes by underwriting new insurance policies, the more premium it collects and invests.
A company's risk retention capacity, or the maximum amount of acceptable risk, is a crucial component in its operations.
On the sources through which the insurer can raise its capital, the IIC official pointed to a government pledge to supply funds by divesting its remaining shares in Alborz Insurance Company.
In July the government made a failed attempt to divest its residue shares in Alborz to private firms via the stock market. The offer flopped as buyers could not afford to purchase the costly block of 639.56 million pieces worth 1.1 trillion rials ($8 million).
However, the government said it insists on the divestiture plan in Alborz and 17 more companies through other methods.
Outlining IIC policy, Rezaee said the insurer is striving to improve its reinsurance sector and avoid unhealthy internal competition.
Reinsurance is the practice whereby insurers transfer portions of their risk portfolios to other parties in some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim.
IIC is presently capable of underwriting 9.3 trillion rials ($79.48 million) in reinsurance cover.
Lifting Solvency Levels
Rezaee pointed to the plan to raise IIC’s solvency level at two from the present four by the end of current fiscal year.
The solvency of insurance companies - their capability to cover exposed risks – is seen in figures and larger figures indicate weaker solvency.
The state-run insurer has the weakest solvency among all insurance firms in the country. Level 4 for IIC means that its capability to fulfill its commitments is over 10% and below 50%.
This is while the company holds more than 30% of the total insurance portfolio.
On IIC performance in the last fiscal year (March), Rezaee said the insurer paid 370 billion rials in claims and earned 570 billion rials in insurance premiums per day in the last year.
On the performance of the company during the first five months of the present fiscal year, he spoke of a 52% growth in premiums and 18% rise in paying for damage claims compared with the same period last year.
IIC paid an average 230 billion rials in claims and earned 480 billion rials in insurance premiums daily during the period, compared to 193 billion rials and 310 billion rials in the first five months of the previous year.