Iran Insurance Report Q3 2012

Includes 3 FREE quarterly updates

The Iran Insurance Report considers the prospects for both life and non-life insurers in the country. As of mid-2012, the latest data published by Bimeh Markazi Iran, the insurance regulator, suggests that total premiums increased by 27% in Iranian year 1389, which ended in March 2011 (please note this year is shown as 2010 in the tables in this report). This was a lot more than the growth of 15% or so that we, and other commentators had been looking for. The implication is that non-life penetration has risen decisively above the level at which it had stagnated in 2005-10, specifically 1.1-1.2% of GDP. In the coming months, we will be looking for further details as to what are the key drivers of this growth. It is not impossible that the major insurers have been able to increase prices. We would be amazed, though, if it is significantly because of developments in Iran’s miniscule life insurance sector. One of the defining characteristics of the economy is entrenched high inflation (and expectations) thanks to persistent monetisation of fiscal deficits. This produces an environment in which no prudent person would enter into a long-term savings contract. Unless and until economic policies in Iran change radically, the reality of the insurance sector will fall a long way short of its potential.
Iran’s insurance sector has a number of strengths, including scale in terms of gross written premiums per annum. Bimeh Iran, the largest company that is a state-owned enterprise, is one of the largest underwriters in the Middle East and would rate as a reasonably large insurer in most countries. Non-life penetration has, as noted above, consistently remained slightly above 1% of GDP. Among other things, this suggests the regulatory regime is reasonably sound. Iran’s insurers have managed to survive in the face of various challenges – not least of which is the almost complete lack of access to the global reinsurance markets. Unlike in other Middle Eastern countries, Iran’s insurance sector does not consist of a surprisingly large number of sub-scale non-life companies that are offshoots of local business interests that do not have a clear edge in the industry.
The sector is undergoing ‘privatisation’, via listings of companies on the Tehran Stock Exchange, and ‘liberalisation’, in that the decisions over products and pricing are moving from Bimeh Markazi Iran (the regulator and, to a certain extent, provider of reinsurance service) to the insurers themselves. However, in contrast to privatisation in other countries, the deals in Iran are not necessarily reducing government control and are certainly not increasing formerly state-owned companies’ access to capital. The limited data that is available suggests the main impact of ‘liberalisation’ is to transfer resources from shareholders of private sector companies (including the recently ‘privatised’ Bimeh Alborz, Bimeh Asia and Bimeh Dana) to the still state-controlled Bimeh Iran, employees and, to a certain extent, insurance customers. A new private sector insurer – Arman – opened its doors in March 2012.

Insurance Industry in Iran

Executive Summary . 5
Table: Total Premiums, 2009-2016 5
Key Insights And Key Risks . 5
SWOT Analysis 7
Iran Insurance Industry SWOT .. 7
Iran Political SWOT .. 8
Iran Economic SWOT 9
Iran Business Environment SWOT ... 10
Life Sector .. 11
Middle East Life Sector Overview . 11
Table: Middle East And Africa Life Premiums, 2008-2016 (US$mn) .. 11
Iran Life Sector Update . 13
Life Insurance Industry Forecast Scenario ... 14
Table: Life Premiums, 2009-2016 14
Growth Drivers And Risk Management Projections . 15
Population ... 15
Table: Insurance Key Drivers, Demographics 2009-2016 ... 15
Non-Life Sector .. 17
Middle East Non-Life Sector Overview . 17
Table: Middle East And Africa Non-Life Premiums, 2008-2016 (US$mn) ... 17
Iran Non-Life Sector . 20
Table: Breakdown Of Gross Written Premiums, 2009-2010 (IRRmn) . 20
Table: Breakdown Of Earned Premiums, 2009-2010 (IRRmn) 21
Table: Retention Ratios, 2009-2010 (net premiums as % of gross premiums) . 22
Non-Life Insurance Industry Forecast Scenario ... 24
Table: Non-Life Premiums, 2009-2016 24
Growth Drivers And Risk Management Projections . 25
Macroeconomic Outlook .. 25
Table: Iran Economic Activity, 2011-2016 .. 27
Political Stability Outlook 27
Table: Middle East And Africa Defence And Security Ratings . 30
Healthcare ... 30
Health Insurance.. 31
Epidemiology ... 32
Table: Insurance Key Drivers, Disability-Adjusted Life Years 2009-2016... 33
Motor ... 34
Table: Insurance Key Drivers, Vehicle Production And Sales, 2010-2016 .. 36
Islamic Finance 36
Insurance Risk/Reward Ratings ... 37
Table: Iran’s Insurance Risk/Reward Ratings . 37
Table: Middle East And Africa Insurance Risk/Reward Ratings .. 38
Competitive Landscape 39
Competitive Landscape Analysis ... 39
Major Players In Iran’s Insurance Sector . 40
Table: Direct Premiums And Direct Loss, 2006-2010 . 41
Table: Total Premiums Growth, 2006-2010. 41
Table: Number Of Insurance Companies And Employees, 2006-2007 . 42
Table: Number Of Branches, Agents And Brokers, 2006-2010 42
Company Profiles .. 43
Local Company Profiles 43
Bimeh Alborz ... 43
Bimeh Asia ... 44
Bimeh Dana . 45
Bimeh Iran ... 46
Parsian Insurance 47
Regional Company Profiles .. 49
Allianz .. 49
Arab Insurance Group (ARIG) . 51
Aviva 52
AXA .. 53
Chartis . 54
Demographic Outlook ... 56
Table: Iran’s Population By Age Group, 1990-2020 (‘000). 57
Table: Iran’s Population By Age Group, 1990-2020 (% of total) 58
Table: Iran’s Key Population Ratios, 1990-2020 . 59
Table: Iran’s Rural And Urban Population, 1990-2020 .. 59
BMI Methodology ... 60
Insurance Risk/Reward Ratings 62
Table: Insurance Risk/Reward Indicators And Rationale 62
Table: Weighting Of Indicators 63

Insurance in Iran

Iran Non-life Market, Limits Of Potential Returns, %

• $ 250
• Industry data
• February 2013

Yearly, From 2011 To 2012
By Business Monitor International
Source: BMI

• Industries : Insurance
• Countries : Iran

Iran Insurance Market, %

• $ 250
• Industry data
• February 2013

Yearly, From 2011 To 2012
By Business Monitor International
Source: BMI

• Industries : Insurance
• Countries : Iran

Iran Insurance Be Rating, %

• $ 250
• Industry data
• February 2013

Yearly, From 2011 To 2012
By Business Monitor International
Source: BMI

• Industries : Insurance
• Countries : Iran