Iran: Regulator to assess adequacy of insurers' reserves
Source: Middle East Insurance Review | Mar 2018
The Iranian insurance industry currently holds a total of IRR330 trillion (US$8.9 billion) in reserves that is expected to rise in the next fiscal year starting on 21 March 2018, as the insurance regulator will direct that greater attention be paid to evaluating reserve adequacy.
Dr Abdolnaser Hemmati, President of Central Insurance of Iran (CII), who revealed this at a press conference recently said that claims payments had surged in the current fiscal year to date because of several major incidents, according to Financial Tribune.
A fire razed Plasco – a decades-old iconic commercial building in downtown Tehran – to the ground and the western province of Kermanshah was hit by a massive 7.2-magnitude earthquake. These were two of last year’s biggest losses for the Iranian market.
The Plasco fire caused estimated economic losses of IRR15 trillion, of which around IRR400 billion was covered by insurance.
For the Kermanshah quake, Dr Hemmati said Iranian insurers have so far paid IRR800 billion in claims, with the final figure expected to reach IRR1.7 trillion.
He cited the Sanchi collision on 6 January this year also as a major loss incident. The Iranian oil tanker, bound for South Korea, collided with a ship in the East China Sea, and exploded, killing all 32 crew onboard. The crew consisted of 30 Iranians and two Bangladeshis.
Dr Hemmati said Iranian insurers are responsible for covering 30% of the $32 million losses of the tanker collision. Another Iranian insurer had provided life coverage amounting to IRR1 billion for each Iranian crew member on the ill-fated ship and will soon pay the compensation.
On a brighter note, he said lawmakers will exempt the insurance industry from a Budget measure which disallows them from earning interest on bank deposits. This exemption would boost insurers’ investment incomes. Dr Hemmati said that insurers are exempted “as their funds belong to the people and they must put at least 30% of their funds as cash deposits in banks”. M
IRR1,000 = US$0.03