Articles

Insurance Management in Iran

Geshm. A bright outlook onto active and exuberant iranian island on persian gulf.

As an integral institution within a complex urban society, insurance has substantially been devised to assist citizens who venture risky enterprises which serve to promote safety, science and wealth in a given society. Although Iranian insurance industry is over 60 years old, serious efforts are yet to be made to enable the mentioned industry to play its decisive role in fostering the national economy, laying necessary foundations for safe investment, promoting non-oil exports and ensuring the social welfare.

Insurance industry was entirely nationalised soon after the victory of the Islamic Revolution, however, during pre-revolution years a state insurance company, twelve private companies as well as two foreign insurance agencies were also active in Iran. The Central Insurance began to function in 1971 as the main supervisory organ, vis-a-vis the performance of the insurance industry as a whole. Additionally the High Council of Insurance was also formed to make relevant regulations and oversee the activities of various companies.

After the revolution all existing private insurance companies as well as two foreign agencies were closed down and only three insurance companies, namely, Iran, Alborz and Asia were licensed to remain active in all pertinent fields. More importantly, due to a merger of ten nationalised insurance companies Dana Insurance was also licensed to assume its activities merely in individual-orientated insurance cases.

In recent years a new company called Exports and Investment Insurance, in partnership with the Central Insurance, other important companies and several banks, was established to furnish the interested exporters and investors with numerous insurance services.Presently the conceived image of insurance is totally that of a state institution. Although nowadays the partnership of private sector in insurance industry seems more indispensable than ever, the mentioned sector displays no interest in such cooperation mainly due to limited prospects for substantial profits, vis-a-vis that of other sectors of economy. Nevertheless, the private sector is now participating in insurance industry only by holding franchise offices.

One of significant evaluating measures of desirability and the success of the insurance industry is per capita premium. However, currently it differs from country to country ranging from US $77 in Lebanon to US $38 in Saudi Arabia, US$17.5 in Turkey, US$ 8.3 in Egypt and US$ 4.9 in Iran. The index demonstrates existing shortcomings in promotion and publicity of insurance in Iran, as a vital institution encompassing the welfare of all citizens. Fortunately to overcome this obstacle and strengthen the country's insurance industry not only necessary regulations are already legislated, but particular supervisory organs are also employing all available potentialities within the country to augment the capacity of numerous insurance services and create new markets.

Insurance and exportation

Insurance can bring about lasting and stable exportation and thus, even in the developed countries, the government plays a predominant role in providing exporters with extensive insurance coverage. Long-term plans as well as huge investments, posing enormous risks, payment of liabilities to exporters without the government's are not ensured by commercial insurance companies. To bridge this serious gap, consequently, the state is forced to take various risks so as to assure the unceasing flow of the exportation. Accordingly, the protection of interests and the guarantee would seem impossible.

In order to maintain the lasting security of commodity, capital and the payment of liabilities to exporters "Iran Export Guarantee Fund" was formed in 1994. Moreover, the most significant measures taken jointly by the parliament and the Islamic government of Iran, at the same year, were as follows: