Comparative Study of Specialized and Professional Insurance Institutions in Selected Countries

Authors: Leili Niakan, Sajad Ramandi, Mohammad Taghi Houshmand, Sepide Ramezani

Coordinator: Insurance Research Center

Abstract
The performance of each economic sector in the country can be evaluated in various dimensions. Dimensions such as value creation, employment, social welfare, educational, cultural development and many other things that require development in each of these dimensions of a coherent, capable, professional and forward-looking structure. In addition to having government and governmental departments, this structure can have independent specialized and professional institutions to can use its professional capability in various areas as a complement to government departments in order to advance the goals.
Existence of specialized and professional institutions and associations in the structure of the insurance industry of each country are necessary in the fields of issuing, approving and renewing licenses of insurance companies, legislating and setting standards, enforcing laws, monitoring the implementation of laws and controlling the performance of the company litigation, education and research, and providing consulting services to insurers and policyholders and protecting the interests of industry stakeholders.
In this study, by comparative study of specialized institutions active in the insurance industry of selected countries and the pathology of the activities of institutions in the Iranian insurance industry, the strengths and weaknesses as well as the quality and quantity of these specialized institutions have been evaluated.

Keywords: comparative study, specialized insurance institutions, welfare

Insurance securities considering Iranian insurance market needs

Main Author: Dr. Farzad Khamesian

Coauthors: Dr. Maryan Ethnaashar and Majid Pireh

Coordinator: Insurance Research Center

Abstract
One of the important institutions in the economic and financial markets that can play an important role in creating motivation among capital owners and reducing possible risks from the allocation of their resources, is insurance. This institution helps people to reduce some risks in their life. On the other hand, based on policies issued to policyholders, insurance companies face various issues and challenges such as providing the necessary capital to accept the relevant risk or the need and necessity of risk transfer. In recent years, some insurance companies around the world have solved their need to provide capital through the capital market and financial instruments such as issuing securities and various derivatives. Also, one of the markets that can be considered as an alternative way of risk transfer is the capital market. Most of the transferring ways to the capital market, which have been used in many countries in recent years, are known as insurance securities and were created during the process of converting into risk securitization.
Based on the studies, the insurance market as well as the capital market of Iran has the capacity to design and use these financial tools to strengthen the connection between the two aforementioned markets. Hence Iranian insurance companies can issue insurance securities in order to provide the necessary capital and transfer part of the risks they have accepted. This project provides the patterns and models necessary to achieve this goal, which are localized based on the conditions of the Iranian insurance and capital markets.

Keywords: Funds, Catastrophe Band (CAT), Insurance Link securities (ILS), Special Purpose Vehicle Definition (SPV), Insurance

Periodic analysis of Iran insurance market

Authors: Dr. Farzad Khamesian, Dr. Maryan Ethnaashar, Loba Malekian, Shima Sakhaee, and Saeed Madadi

Coordinator: Insurance Research Center

Abstract
Survival of economic activities, when faced with social and economic crises, is guaranteed with the help of insurance activities. In other words, insurance plays an effective role in reducing the destructive effects of economic recessions and helps to stabilize the economy, which is considered an important element for growth and development. By analyzing the interrelationship of the insurance industry with other sectors of the economy and providing logical and scientific predictions on the insurance future with respect to macroeconomic environment, the information of the insurance players becomes more complete. Then, by adopting effective operational strategies and solutions, the development of the insurance system as one of the important pillars of the financial markets will be guaranteed. Therefore, in this project, we tried to examine the insurance market in Iran from the perspectives namely economic, financial, risk and development.
The economic analysis of the insurance industry emphasizes the identification and measurement of the relationship between the variables of the insurance industry and the economic variables and further predicts the state of the insurance industry affected by the economic conditions. The development status of the Iran insurance industry has been investigated according to the global growth of the insurance industry, and by estimating the S-curve, an overview of the current Iran insurance position within development stages and its future scope have been presented. Then, with the aim of explaining the premiums, the analysis of insurance and economic periods in Iran has been conducted. Finally, the analysis and forecast of the insurance production situation, based on the insurance macro indicators (including the insurance premiums, the share of insurance lines and the price index of issued insurance policies) on the short-term results for the next year are provided.
Further, the status and performance of the insurance industry have been examined and evaluated. In financial analysis, efficiency and stability of the insurance industry are analyzed and the risk analysis has been carried on according to the behavior of the claims density paid by insurance companies within different periods at the macro level. Finally, the development analysis of the industry has been measured and evaluated according to the indicators of production, customer and physical development. The output of the project includes a panel of insurance industry indicators in seasonal frequency, forecasting the status and performance indicators from the economic, financial, risk and development perspective.

Keywords:  Market Analysis, Insurance, Economic Analysis, Performance Analysis

Examining the Possibility of Issuing a Third Party Insurance Policy Based on the Characteristics of the Driver (Note 1, Article 18 of the New Third Party Insurance Law) and Presenting a Proposed Regulation

Authors: Azadeh Bahador, Azin Ostad Ramezan, Farbod Khanizadeh

Coordinator: Property and Casualty (Non-life) Insurance Research Group

Abstract
In order to write the regulations of note 1 of article 18 "the possibility of issuing a third party insurance policy based on the characteristics of the driver", at first by using the laws of other countries and also using the opinions of experts, to identify the axes required in the regulations of note 1 of article 18 has been paid. Then a questionnaire using the identified axes; have been designed and tested statistically. According to the experts of the insurance industry in the field of car insurance, it is necessary in the regulations related to note 1 of article 18 of the new law on third party insurance to the axes designed, including; Considering the characteristics of the main drivers and other authorized drivers, car characteristics, car usage, driving and insurance records of all the main and authorized drivers, linking the database of other institutions related to the database of insurance companies.

Keywords: new third party insurance law, characteristics of the driver, proposed regulation

The Concept, Framework and Model of The Risk-Based Supervision Regime

Author: Dr.Leili Niakan

Coordinator:Fatemeh Atatalab

Abstract

The risk-based supervision in any country is based on the internal and legal environment of that country. The traditional method of supervision in the insurance industry is based on reviewing the performance of companies to control its compliance with laws and regulations and to ensure that the financial statements of companies show their financial status correctly, therefore, doing this in an optimal way requires the use of risk based evaluation.
Risk-based supervision improves the traditional monitoring method to the extent that it enables the identification of risks that may hinder the company's growth. Of course, it should be noted that the risk-based supervision process is not an attempt to examine the company's financial results or conduct a comprehensive review; rather it focuses on risks that are related to management processes in dealing with such risks in insurance companies. The risk-based supervision process takes into account all the risks that a company faces, and through a structured process, it identifies the risks that have the most vital effect on the financial growth of that company.
In this report, in order to understand the concept and framework of the risk-based supervision regime, the definition of risk-based supervision and its monitoring model is first presented, and then, for a better understanding, this supervisory approach is compared with the traditional supervisory approach. Considering that most countries are moving towards risk-based supervision, we tried to mention the goals and advantages expected from the risk-based supervision model.
The risk-based monitoring model includes two levels. A regulatory level that shows the minimum conditions necessary for solvency and has a more quantitative nature and we call it more standard and a more specific supervisory level that is based on the analysis of the risks accepted by each insurer and the evaluation of the supervision and management carried out by a company. It is more qualitative and is regulated by the supervisory authority.
Choosing the method of monitoring insurance companies in any country should reflect the factors that are specific to that country; because the method that is suitable for monitoring the insurance industry in one country may not be suitable for another country. In order for a regulatory process to have the greatest effect, this regulatory process must be in sync with the economic and technical development stage of that country so that the financial sector supervisors can trust it.
Risk-based supervision focuses on processes rather than outputs and enables supervisors to spend a minimum amount of effort on satisfactory matters, focuses on matters that require more attention, relies on managers and professionals, and includes deterrence.
The goals and benefits expected from the risk-based supervision model can be mentioned as strengthening the risk management system, focusing on preventive (prudentially) measures, more flexible regulations, international recommendations and resource targeting.
In the third part of this report, the proposed risk-based supervision model for Iran was discussed, and the definitions of the modules and the purpose of the supervisory authority were examined in this section. In the fourth part, the theoretical foundations of risk measurement of insurance institutions were discussed, and the method of measuring market, credit, operational, liquidity and insurance risks was explained, and finally, the summary and conclusion were presented in the fifth part.

Keywords: Risk-based supervision, Monitoring, Bankruptcy, Solvency.

Proposal of Instructions Related to the Establishment and Framework of Activities of Surety Institutions

Authors: Dr. Asma Hamzeh and Amin Afshari

Coordinator: Fatemeh Atatalab

Abstract

The changing economic conditions with the orientation towards globalization have caused price instability and imbalance in the market of goods and services. The result of these rapid changes and developments and the impact they have on the domestic and international markets, in addition to creating a lack of trust and confidence in economic decisions, has severely affected the obligations of individuals and institutions towards each other.
Surety bond is a common tool in the world. This tool is provided to reassure project owners and is actually a risk transfer tool based on which the project owner's risk is transferred to the surety. The widespread use of insurance policies and sureties, as well as their high flexibility, has made these two tools play a very important and effective role in covering all kinds of civil and commercial risks in the economic life of individuals.
In Iran, the provision of surety services has been the monopoly of banks since the beginning and mostly in the form of independent or on-demand guarantees, but due to the recent sanctions, the activity of Iranian banking institutions in issuing international bank guarantees with prohibitions. Therefore, regardless of the fact that the surety bond by companies or surety institutions around the world is considered one of the important indicators of the development of countries, currently, in order to provide international guarantee services, the country of Iran needs an institution that replaces banks. On the other hand, the use of bank guarantees in most levels and economic activities inside the country has not been fulfilled in many cases, and in addition to implying a volume of legal and criminal cases with various issues in the courts between employers and contractors and the guarantor bank. It also reduces the speed of the physical progress of the work and does not facilitate the implementation of project-oriented contracts.
In Paragraph (A) of Article 9 of the Law "Maximum Use of the Production and Service Capacity of the Country and Protection of Iranian Goods", which was recently approved by the Guardian Council, in order to provide all kinds of guarantee tools needed by the country's production and service sector, the government is required to provide the necessary legal frameworks. It provided non-governmental guarantees for the establishment and formation of the activity of non-governmental institutions after this law came into force. In this regard, the implementation of the research project "proposal of instructions related to the establishment and framework of activities of surety institutions" by the Central Insurance of Islamic Republic of Iran was included in the agenda of the Insurance Research Center.
This study is organized in five general parts of the research, the review of the activity framework of surety companies, the experience of other countries in the field of surety bond, and a review of the domestic experience of the country in the field of issuing various types of sureties, and summarizing and proposing guidelines related to the establishment of surety companies.

Keywords: Surety, Guarantee, Insurance, Instruction.