International brokers and reinsurers remain hesitant about doing business with Iran, says Axco Insurance Information Services (Axco) in its latest country report, despite the country offering “vast opportunity” following the removal of US and UN sanctions in January this year.
Iran is the largest non-life insurance market in the Middle East and was the 29th largest market globally in 2014, and a significant proportion of its business relates to the marine sector – particularly oil exports.
In June 2010 the UN Security Council imposed sanctions, which included restricting the provision of underwriting services, insurance and reinsurance. EU sanctions, which were harsher, were also imposed. This resulted in the supply of (re)insurance capacity from European and US markets effectively ceasing in 2012.
Axco noted that “a myriad of challenges await foreigners attempting to enter the market. US primary economic sanctions remain, precluding US companies from re-entering Iran”. The largest bottleneck in future business with Iran is likely to be the US banks.
There are currently two state owned insurers; Bimeh Iran, which held the largest market share at just over 40% in 2014, and reinsurer Bimeh Markazi, which enjoys a compulsory cession of 25% of non-life business and first refusal on up to 30% of all outwards reinsurance.