Using reinsurance solutions for risk distribution is one of the most significant available strategies in the market that will help grow the market share and insurers’ efficiency in the world, according to Public Relations Office, IRC. Successful performance and improved efficiency of the insurance industry will generate strong motivation in other industries and the whole economy at large. Thus, creating the necessary competitive environment for the insurance industry of the country requires an efficient reinsurance market structure. The impact of the reinsurance on the insurance market can be observed in its capacity to earn foreign currency income by accepting reinsurance from the foreign insurers and to be a source of foreign expenditure through ceding reinsurance to a foreign reinsurance company.
Accordingly, recently, IRC’s Reinsurance Desk has released a study report titled “A Glimpse at Iran’s Reinsurance Market”. Prepared by Mrs Fatemeh Atatalab, the Director of IRC’s Reinsurance Desk, the study is intended to show a general picture of the Iranian reinsurance market in terms of size, capacity, and key financial ratios. It also provides a statistical analysis of the country’s reinsurance market performance, its structure, and 31 other countries in terms of competition and monopoly, the status of the obligatory reinsurance in Iran and 80 other countries in the world.
One of the necessary factors in determining the efficiency of a given reinsurance structure in any country is risk assumption capacity and according to statistics, such capacity among the private insurance companies is diminutive.
Based on the study results, Iran’s reinsurance market share, compared with the insurance market is relatively small. Although both markets have grown in the past decade, the structure of the reinsurance market in Iran remains effectively concentrated and monopolized.
The results also indicate that the majority of the reinsurance market in the selected countries have a complete monopoly or a multilayered monopoly and are heavily concentrated. Among the countries under study, 13 countries have only one reinsurer and preserve a complete monopolized structure.
The analysis of the reinsurance status in 80 countries also shows that 39 countries including Iran have presently obligatory reinsurance that is seriously preserved due to the protectionism and foreign exchange control policies. Undoubtedly, the experiences of the other countries show that they are gradually moving toward limiting and ultimately eliminating obligatory reinsurance. Usually, the process of obligatory reinsurance removal takes about 4 to 10 years period. In some countries, the obligatory reinsurance for some lines is completely eliminated and is minimally preserved in other lines.
Those interested to access and download the Persian full text of the study, please visit https://www.irc.ac.ir/fa-IR/Irc/4946/Articles/view/14643/1529.