The government plans to reduce the percentage of premiums Iranian insurance firms are required to cede to the Central Insurance of Iran (CII) for the purpose of reinsurance, the head 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%,” said Mr Abdolnasser Hemmati who is CII President.
The five-year development plan now aims to gradually reduce the compulsory cession ratios by the end of 2022, according to a report in Financial Tribune. No detailed timetable was reported.
In late February, the Cabinet 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,” Mr Hemmati said. “This will be a way for the supervisory entity [CII] to exert control over insurance companies.”
CII was founded in 1971 for the purpose of regulating and guiding insurance companies in Iran. In parallel with its regulatory and supervisory role, it receives a compulsory cession from all insurance companies and conducts both inward and outward reinsurance business in the domestic and international markets.