EghtesadOnline: The government plans to reduce the percentage of premiums Iranian insurance firms are obligated to entrust to the Central Insurance of Iran for the purpose of reinsurance, the director of the industry’s regulator 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%,” Abdolnasser Hemmati also told IBENA.
Iranian insurance companies are currently obliged to cede 15% and 25% of all their non-life and life insurance premium income respectively to the CII for the purpose of reinsurance.
The five-year development plan now aims to gradually reduce that considerably by the end of 2022, according to Financial Tribune.
In late February, the Cabinet convened and, among other things, decided that the cap on compulsory reinsurance cession should remain unchanged for the remainder of the current fiscal year that began in March.
“Reinsurance cession remaining with the CII after the Sixth Plan will be employed mostly as a tool for supervision,” Hemmati said on Sunday.
Hemmati reaffirmed the view that “this will be a way for the supervisory entity [CII] to exert control over insurance companies” and that insurers keep these funds with CII to transfer a portion of their risk to the reinsurer.
CII was founded in 1971 for the purpose of regulating, expanding and guiding insurance companies in Iran. In parallel with its regulatory and supervisory role, it receives a compulsory cession from all insurance companies and also conducts both inward and outward reinsurance business in the national and international markets.