"The privatization of insurance companies is a must and as I am personally of the belief that the three insurance companies owned by the government [Asia, Alborz and Dana] must be divested, I will vigorously follow up that process," Minister of Economic Affairs and Finance Masoud Karbasian told the 24th National Conference on Insurance and Development held in Tehran on Monday.
Oil Minister Bijan Namdar Zanganeh, the head of Central Insurance of Iran, Abdolnasser Hemmati, and the head of Majlis Economic Commission, Mohammad Reza Pour-Ebrahimi, also delivered keynote speeches at the conference, dubbed "Risk Management and Insurance: Requirements, Challenges and Solutions", which was held to mark Insurance Day.
Karbasian said CII will remain the sole regulator and policymaker of the industry while Iran Insurance Company, which alone accounts for 60% of premium incomes, will retain its state-owned status, according to Financial Tribune.
The economy minister called for endeavors to increase insurance penetration in Iran, adding that the share of life insurance is currently low and must rise to 50% as envisioned in the Sixth Five-Year Development Plan (2017-22).
"The current insurance penetration ratio of 2.2% is also envisioned to reach 7% by the end of the plan," he said.
Both Karbasian and Hemmati touted recent breakthroughs in connecting with foreign reinsurers and emphasized on transferring a portion of the country's risk overseas.
CII in late September reached a much-anticipated agreement with France's SCOR SE, based on which the world's fourth-largest reinsurer will provide catastrophe excess of loss reinsurance coverage for Iran.
Mellat Insurance, affiliated with Bank Mellat, later signed a contract with the major reinsurer for catastrophic losses up to a ceiling of €200 million.
Need for Improvement
At the Monday confab, Hemmati said the Iranian insurance penetration ratio has increased to 2.2% from 0.34% over two decades.
"We have witnessed a good 20% growth in the first eight months of the current fiscal year (ending Nov. 21) and this shows that our insurance executives are taking risk management seriously," he added.
The official referred to turning insurance companies into specialized insurance firms for separating life and non-life categories as one of the most important measures undertaken by CII, saying tools have been considered to establish specialized life insurance firms.
"A specialized management unit will be formed within CII with the mandate of overseeing life insurance companies," he said.
With the loss of more than 500 people and millions of dollars in damages in the destructive quake that shook Kermanshah and other western regions of the country still fresh in the minds of all Iranians, Karbasian, Hemmati and Pour-Ebrahimi discussed the establishment of a natural disasters insurance fund.
A bill is currently in the parliament to establish such a fund but, according to Pour-Ebrahimi, the Guardians Council found faults with it and sent it back to lawmakers for revisions.
"We have all declared this an issue of utmost importance and if the government agrees to accept the financial burden of establishing this fund, we are ready to pass this bill," Pour-Ebrahimi promised.
He also called on Hemmati to spearhead a drive in the insurance industry to get rid of old executives who should have retired years ago.
Zanganeh petitioned insurers to better execute their job of evaluating the potential risk of oil and gas projects to prevent massive losses later.
"The volume of total productions in the oil industry exceeds $100 billion and therefore the insurance industry must demonstrate the necessary resolution and accuracy in this high-pressure field to control this financial risk," he said.