Tehran, Iran, December 7
By Mehdi Sepahvand –- Trend:
Catastrophe risk (catrisk) insurance is going to be one of Iran’s lucrative markets in the post-sanctions era. This year Iran was freed from international sanctions, which attracted a host of foreign insurance companies to explore industrial sectors for investment. However, life and property insurance have been less explored in the meantime.
Many cities in Iran are exposed to natural hazards with high potential for future human and economic disasters. There have been devastating earthquakes and floods in recent decades with very adverse economic, social and political consequences. Among other concerns, demands for catrisk models to manage catastrophe risk transfer in terms of commercial insurance have been growing in recent years.
Unbalanced development in Iran has caused rapid growth in big municipal areas in recent years mostly as a result of migration. Rapid urbanization in conjunction with a high concentration of economic assets in urban areas in Iran have exposed big portions of population and economic resources to natural hazards.
In general, ordinary people and property-owners are on the frontline when it comes to natural catastrophes, dealing with their immediate consequences: loss of life and damage to or the complete destruction of properties.
Not only is the country a valuable for insurance in the catrisk center, the domestic insurance industry is also in need of much research and development program. Exposure data quality in Iran varies from country to country. Insurance and reinsurance underwriters are often facing property insurance exposure data in aggregated format with little or no descriptions of risk characteristics and often with proxy location descriptions.
Due to low penetration of catastrophe insurance in the country and the lack of proper attention to risk transfer during the sanction years, there has been little interest in developing such model for Iran.
The adverse effects of natural hazards on people in developing countries such as Iran are far more significant than with developed countries. This is mainly due to limited financial resources available to developing countries and the lack of proper risk management strategies and programs.
The Iranian Insurance Research Center (IRC) is offering data on local and regional markets free of charge to foreign insurance companies which are interested in investment, hoping to lure investors especially into offering life insurance plans to the Iranian population.
Last week foreign insurance companies such as Munich Re, ERGO Group, Nasco Insurance Group, Azre, and Toyota Tsusho visited Iran to seek investment grounds.
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