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Iran is home to an insurance sector that writes over US$4,000mn in premiums annually – equal to around 1.5% of GDP – and several of the largest non-life companies in the Middle East, indicating that there is widespread understanding of the general concept of insurance among its citizens and companies. However, the challenges that must be overcome if Iran’s insurance sector is to reach its full potential are both large and numerous. They would also be large and numerous even if Iran were not the object of international sanctions. In one of the few developments reported in the trade media outside Iran over the last six months or so, both Allianz SE and Munich Reinsurance said that they would suspend their business in Iran. This decision will have very little impact on Allianz, but may cost Munich Re around EUR10mn in annual reinsurance premiums.
Arguably the main problem is the conduct of monetary and fiscal policy. In spite of substantial revenues from oil production, the government has for a long time run substantial fiscal deficits, which have been monetised. As we explain in this report, the structural deficits are mainly the result of subsidies (for instance in relation to the price of gasoline). The consequence is that, for much of the last decade, Iran has experienced inflation of 12-15% a year, although the rate rose 27% in 2008/09.
High inflation distorts the impact of prices and complicates competition by companies (and insurers) on the basis of price. Furthermore, it shortens the perspective of economic actors. For Iran, one consequence has been the non-development of life insurance, which by its nature involves long-term relationships between underwriters and their clients. The history of persistent high inflation sets Iran apart from all other countries in the Middle East whose insurance sectors are profiled by BMI.
As we have discussed in previous reports, Iran is moving gradually towards the liberalisation of financial services. About 75% of the market (in terms of gross written premiums) is accounted for by the four large, state-owned insurers – Bimeh Iran, Bimeh Asia, Bimeh Alborz and Bimeh Dana. The remainder includes 16 relatively new private sector companies, including Bimeh Moallem, Bimeh Parsian, Bimeh Karafarin and Bimeh Razi.
In this report we continue to provide a breakdown of the insurance sector by line from the point of view of the regulator or trade association. In Iran in 2008 comprehensive motor insurance (presumably compulsory motor third party liability, or CMTPL) was the largest line in the non-life segment, accounting for about half of gross written premiums. Other major lines included motor (CASCO), health, fire and liability insurance.
We have been able to ensure that the report includes actual data for 2008. We have also generally been able to use data published during 2009 to adjust our forecasts for the year as a whole. We expect total premiums in 2009 of IRR50,889,347mn. This comprises non-life premiums of IRR48,223,890mn and life premiums of IRR2,665,457mn. In 2014, the corresponding figures are forecast to be IRR 95,696,535mn IRR 90,518,340mn and IRR 5,178,195mn respectively. In terms of the key drivers that underpin our forecasts, we expect non-life penetration to rise from 1.49% in 2009 to 1.50% in 2014, and for life density to rise from US$3.64 per capita to US$5.35. BMI’s insurance industry Business Environment Rating for Iran is 35.7 out of 100.
Issues To Watch
Political Risk
BMI does not at this stage expect that the political unrest in Iran will lead to a significant contraction in GDP (in the way that it did 30 years ago at the time of the fall of the Shah). Nevertheless, we recognise that political problems could have an adverse impact on economic activity.
Government Subsidies
Any substantial reduction in government subsidies (on gasoline etc) will be a necessary, although not sufficient, move towards balanced budgets and lower inflation. As explained above, Iran’s insurance sector will remain stunted while inflation remains a problem.
International Activities
The isolation of Iranian insurance companies from the global economy is less than total. Bimeh Iran has minor operations in Gulf Cooperation Council (GCC) countries – and may be able to expand these over the medium term.
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Contact:
Ms. Sunita
7557 Rambler road,
Suite 727, Dallas, TX 75231
Tel: +1-888-989-8004
http://reportsandreports.blogspot.com/
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Original Source : –Insurance Market
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Browse All Business Monitor International Market Research Reports
Iran is home to an insurance sector that writes over US$4,000mn in premiums annually – equal to around 1.5% of GDP – and several of the largest non-life companies in the Middle East, indicating that there is widespread understanding of the general concept of insurance among its citizens and companies. However, the challenges that must be overcome if Iran’s insurance sector is to reach its full potential are both large and numerous. They would also be large and numerous even if Iran were not the object of international sanctions. In one of the few developments reported in the trade media outside Iran over the last six months or so, both Allianz SE and Munich Reinsurance said that they would suspend their business in Iran. This decision will have very little impact on Allianz, but may cost Munich Re around EUR10mn in annual reinsurance premiums.
Arguably the main problem is the conduct of monetary and fiscal policy. In spite of substantial revenues from oil production, the government has for a long time run substantial fiscal deficits, which have been monetised. As we explain in this report, the structural deficits are mainly the result of subsidies (for instance in relation to the price of gasoline). The consequence is that, for much of the last decade, Iran has experienced inflation of 12-15% a year, although the rate rose 27% in 2008/09.
High inflation distorts the impact of prices and complicates competition by companies (and insurers) on the basis of price. Furthermore, it shortens the perspective of economic actors. For Iran, one consequence has been the non-development of life insurance, which by its nature involves long-term relationships between underwriters and their clients. The history of persistent high inflation sets Iran apart from all other countries in the Middle East whose insurance sectors are profiled by BMI.
As we have discussed in previous reports, Iran is moving gradually towards the liberalisation of financial services. About 75% of the market (in terms of gross written premiums) is accounted for by the four large, state-owned insurers – Bimeh Iran, Bimeh Asia, Bimeh Alborz and Bimeh Dana. The remainder includes 16 relatively new private sector companies, including Bimeh Moallem, Bimeh Parsian, Bimeh Karafarin and Bimeh Razi.
In this report we continue to provide a breakdown of the insurance sector by line from the point of view of the regulator or trade association. In Iran in 2008 comprehensive motor insurance (presumably compulsory motor third party liability, or CMTPL) was the largest line in the non-life segment, accounting for about half of gross written premiums. Other major lines included motor (CASCO), health, fire and liability insurance.
We have been able to ensure that the report includes actual data for 2008. We have also generally been able to use data published during 2009 to adjust our forecasts for the year as a whole. We expect total premiums in 2009 of IRR50,889,347mn. This comprises non-life premiums of IRR48,223,890mn and life premiums of IRR2,665,457mn. In 2014, the corresponding figures are forecast to be IRR 95,696,535mn IRR 90,518,340mn and IRR 5,178,195mn respectively. In terms of the key drivers that underpin our forecasts, we expect non-life penetration to rise from 1.49% in 2009 to 1.50% in 2014, and for life density to rise from US$3.64 per capita to US$5.35. BMI’s insurance industry Business Environment Rating for Iran is 35.7 out of 100.
Issues To Watch
Political Risk
BMI does not at this stage expect that the political unrest in Iran will lead to a significant contraction in GDP (in the way that it did 30 years ago at the time of the fall of the Shah). Nevertheless, we recognise that political problems could have an adverse impact on economic activity.
Government Subsidies
Any substantial reduction in government subsidies (on gasoline etc) will be a necessary, although not sufficient, move towards balanced budgets and lower inflation. As explained above, Iran’s insurance sector will remain stunted while inflation remains a problem.
International Activities
The isolation of Iranian insurance companies from the global economy is less than total. Bimeh Iran has minor operations in Gulf Cooperation Council (GCC) countries – and may be able to expand these over the medium term.
About Us
ReportsandReports comprises an online library of 10,000 reports, in-depth market research studies of over 5000 micro markets, and 25 industry specific websites. Our client list boasts almost all well-known publishers of such reports across the globe. We as a third-party reseller of market research reports employ a number of marketing tools, such as press releases, email-marketing and effective search-engine optimization techniques to drive revenues for our clients. We also provide 24/7 online and offline support service to our customers.
Contact:
Ms. Sunita
7557 Rambler road,
Suite 727, Dallas, TX 75231
Tel: +1-888-989-8004
http://reportsandreports.blogspot.com/
http://reportsandreports.proarticles.co.uk/
http://reportsnreports.wordpress.com/
Original Source : –Insurance Market
Buy Now : Market Research Report
