One of the effective tools for risk coverage is strengthening the relationship with the capital market

According to Puli Mali News, Majid Behzadpour, the head of the Central Insurance, who spoke in the innovative Tuesdays campaign dedicated to the introduction of reinsurance financing bonds, referring to the history of the efforts of the Central Insurance to design and seriously pursue the creation of suitable financial instruments for Insurance from the years before 2019, stated: One of the efficient and effective methods to cover the risk of insurance companies is to establish effective communication between the insurance industry and the capital market, which is developed through the issuance of insurance securities, and today it is one of the Different types of these bonds are called reinsurance bonds.

The head of Central Insurance described the capacity of the insurance industry as favorable for the entry of new reinsurance companies and stated: It is not customary in the world for insurance companies to directly intervene in reinsurance affairs, and in the future planning, it is designed in such a way that through capacity building in The area of ​​reliance of this case should be resolved.
Emphasizing the necessity of revising Regulation No. 97, Behzadpour gave explanations regarding the importance of the risk transfer issue and various fields of widespread entry into the capital market.
The head of the Supreme Insurance Council further said: Due to the lack of familiarity of the people with these bonds, their release will require culture building and capacity building, as well as targeting institutional investors.
In another part of his speech, he addressed the issue of combating money laundering and stated: Central Insurance prepared the anti-money laundering document and presented it to the Supreme Anti-Money Laundering Council, and it was noted in the meeting that was held in the said council.
In explaining the characteristics of this document and possible concerns regarding it, Behzadpour stated: The insurance industry has no problems in terms of the issues raised in the fight against money laundering and it is one of the areas that carries out its activities with the least concern and reports The ones that have been presented in this connection in the past years are very small and it can be boldly claimed that the insurance industry in the financial sector of the country is one of the healthiest economic areas of the country.
He named clarification as one of the main policies of the insurance industry supervisory body and said: the insurance penetration rate, which is the result of the ratio of production insurance premiums to the country’s gross domestic product, is therefore not affected by changes in the value of the Rial against foreign currencies, and its growth or decline to the growth rate of production insurance premium compared to the growth rate of GDP.
In this regard, the General Director of Central Insurance added: Considering the revision of the estimates regarding the amount of gross domestic product by the relevant authorities, the declared amount for the insurance penetration rate should also be revised, which leads to the reduction of the previous estimate. For this reason, the issue raised regarding the official change of the parity rate of Rial against foreign currencies goes back to the values ​​of production insurance premium and per capita insurance premium of the country, which due to the decrease of the parity rate of Rial, this causes the country’s rank to decrease in two indexes of production insurance premium. And the per capita insurance premium of the country.
In the end, Behzadpour expressed his hope that the issue of issuing insurance bonds will be implemented by the end of this year.
It is worth mentioning that the issuance of reinsurance securities is structured in agreement with the stock exchange organization and based on the rules of the insurance contract and agency contract, through which the insurance industry can transfer part of the risk of its reinsurance operation to the capital market, and the structure of these bonds It is in such a way that in exchange for accepting insurance risks, it earns investors more profit than other similar securities.
It should be noted that these securities are registered and their holders participate in providing the capital required to accept all or part of the insurance risk portfolio and the resulting proceeds, and these securities can be traded on the stock exchange or over-the-counter markets.

Source – General Department of Public Relations and International Affairs of Central Insurance