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President at 24th NCID:

Risk Management, Insurance Industry No.1 Challenge

The 24th National Conference on Insurance and Development witnessed the presence of state senior officials, including the Minister of Economic Affairs and Finance, the President of Bimeh Markazi Iran (Central Insurance of IR Iran), Head of Majlis (Parliament) Economic Commission, Chairman of the Islamic City Council of Tehran, Deputy Minister and Head of Department for Banking and Insurance Affairs affiliated with the Ministry of Economic Affairs and Finance, Managing Director of IR Iran Roads Maintenance and Transportation Organization, a number of Majlis members, along with managing directors of Iranian insurance and reinsurance companies, all gathering together in Milad Tower, on the National Day of Insurance, the 13th of Azar 1396 (4th of December 2017). Dr. Abdolnaser Hemmati, the President of Bimeh Markazi, delivered the keynote speech, concise of which is as follows;

“Approximately a quarter century ago, when I assumed the responsibility of Bimeh Markazi, and after intensive attempts and follow-up that we managed to register the National Day of Insurance on the 13th of Azar, the First National Conference on Insurance and Development was organized by us. Therefore, I feel joyful to speak of growth and rapid progress of insurance industry through the endeavors of Iranian insurance key players. During this epoch, the insurance growth rate was 4.5 times as much as GDP growth resulting in an increase of insurance penetration rate from 0.34 to 2.2 percent.

The 20-percent growth during the first eight months of this year is the harbinger of the steady upward trend in the Iranian insurance industry. More importantly, the growth of insurance premium and loss has reached a balance.

As for the theme of this year conference, i.e. risk management, it is noteworthy that the mission of an insurance supervisory-regulatory entity is to ensure the rights of the insured and, all the same, insurers. The framework of corporate governance ensures all beneficiaries including the insured and shareholders. In view of that, the bylaw ratified by the High Council of Insurance (HCI) obligates insurance companies to establish effective risk management and internal control systems. Both systems ought to embrace four chief missions, risk management, adjustment, actuary, and internal auditing.

Likewise, the supervisory body is entrusted to control the efficiency and quality of attempts by insurers. Owing to dynamic risk portfolio, the insurance industry must constantly observe and control risks in order to provide feasible solutions to the managerial problems. Thus, major challenge of insurance risk management might be inappropriate approaches to attend to the matter. Insufficient technical training and inefficient international relations contribute to such a challenge. As a result, corporate governance bylaw makes insurance companies devise and establish risk management and internal control systems that can be quite time-consuming.

Apart from devising, approving, and announcing the corporate governance regulations, other substantial achievements by Bimeh Markazi for the purpose of developing insurance, solvency control, optimal supervision, over the last year, are as follows;

1.     Stepping forward to specializing insurance companies, segregating life and non-life accounts, paving the grounds for reinforcing specialized life insurance companies, and above all forming an integrated technical management in Bimeh Markazi to supervise life insurance business;

2.     Implementing on-site supervision of insurance companies, gradual development of managerial activities applicable to insurance companies supervision;

3.     Approving Bylaw No. 94, in High Council of Insurance, which is to be substituted for Bylaw No. 81 effective from 1397 (2018-19), and determining insurance premium rate in companies based on the cost price that is to be controlled and supervised by Bimeh Markazi;

4.     Reinforcing financial solvency control of insurance companies based on required provision gradual acquisition by insurers, while emphasizing the inevitability of required capital till the end of financial year, in accordance with the ratification of the Cabinet, and more importantly, that the general assembly of all insurance companies were held in due course;

5.     Incessant expanding of Sanhab system, implementing the unique code for third party liability insurance policies, and its gradual realization in other classes of insurance including cargo, fire, etc. to control any misconduct;

6.     Approving bylaw related to the new law of TPL, implementing major parts of law, problem solving regarding the previous law, as far as people and insurers are concerned;

7.     Controlling and supervising huge loss compensation over the last year which was, by land large, due to nonconformity to safety principles or lack of risk management by a number of insurers or the insured; thanks are due to our colleagues in insurance companies who attended to the loss payment immediately and precisely;

8.     Succeeding in obtaining reinsurance coverage from foreign reputable companies intended for NAT CAT risks in post-sanction era; thanks are due to diplomatic efforts and intensive negotiations of Iranian insurance industry.

9.     Obtaining the permit from Majlis for gradual decrease of compulsory reinsurance during the Sixth Development Plan, launched since this year;

10.    Planning and implementing training programs for insurance senior managers, calling Professional Insurance Institute and other NGO’s to train qualified professional managers to run insurance companies;


11.    Pursuing and approving the remaining bill from 1382, i.e. 14 years ago, regarding the establishment of natural catastrophe insurance pool which is hoped to be ratified by the Guardian Council and government, as it plays vital role in compensating the loss for the victims and survivors of earthquake.”

11:40 - 04/12/2017    /    Number : 3042    /    Show Count : 1393