A recent research project conducted at IRC entitled "Analysis of the Impact of Sanctions on Iran Insurance Industry: Reinsurance Sector" has attempted to examine the impact of the sanctions on the insurance industry and other relevant inflicted sectors. The economic sanctions are the most profitable of all and have the most dramatic impact and create huge shock on the target country. During the period of sanctions, the adverse effect of foreign currency exchange restrictions can be seen in the reinsurance sector as the most significant means of risk transfer in any economy. Thus, reinsurance sector is the main focus of the study being reported, according to PRIAO, IRC.
This research project initially provides a brief account of the history of the sanctions imposed on Iran by the UN, U.S., EU, and some other institutes active in formulating such programs. It also deals with the direct and indirect impacts of the sanctions on the insurance industry and delineates the strengths, weaknesses, opportunities, and threats caused by these sanctions. The study not only presents the experiences of the other countries in sanction conditions, it also maps out some strategies for the insurance industry to reduce the impact of the sanctions.
According to the study, the insurance companies are reciprocally influenced by demographic variables, labor market, macro-economic variables, government budget, and financial markets. Insurance development has, at all times, paved the way for the economic development of the country, hence, the assessment of the impact of the sanctions imposed on the insurance industry and employing the results of the study in order to reduce such sanctions and to help improve the performance of various sectors of the economy is highly advantageous.
Based on the results of the study, the most significant strategies that insurance industry can adopt in order to reduce the impacts of the sanctions are as follows: fostering the relationship between the insurance industry and other industries including gas and petroleum, amendments of the laws and regulations of the insurance industry with respect to sanctions, raising the insurers' capital for underwriting, introducing ILS (insurance-linked securities), augmenting insurance capacity and the Iranian P&I clubs coverage range, focusing on the international CEO and personnel training courses including reinsurance contracts, establishing funds and consortiums within the insurance industry, setting up an internal rating system, using the insurance agencies abroad, and working out bilateral agreements for developing banking relationships.
The Persian full text of the research project is available at this link.