With the upsurge of the extreme events and while the natural perils losses are considered as the major threat to the insurance industry, the increasing trend of such events, have caused many to purchase relevant insurance products and this is an opportunity for the insurance industry to increase its penetration rate.  Thus, the knowledge about the historical data related to the natural perils and the possible effects of the climate change on such perils until the end of the century, is the first and foremost step for the insurance industry to take in order to understand thoroughly the climate related threats.

In this respect, having sound knowledge of the upcoming losses, the measures taken by the private, public, and the society in order to raise awareness about this subject and embracing the insurance culture through increasing the insurance penetration rate in the country, are highly significant.

In the present report, adopting approaches based on the quantitative and qualitative research methodologies and the three-level analysis approach, the necessity of developing flood insurance in the face of possible climate change conditions as a national priority and effective in the future of the country, are analyzed as follows:

In the first level, employing qualitative research methodology, the need for focusing on flood from the perspective of the relevant international experiences is delineated. In this section, in addition to presenting the recent losses incurred due to floods in Iran and the effective factors in increasing the flood risk and exposure and the climate change effect, the outcome of the latter on the severity and frequency of the flood events and the role of insurance in decreasing such flood risks are addressed.

The second level of analysis which is based on the quantitative research methodology, attempts to examine the climate change effect on the flood proneness of various regions of Iran in future intervals. The results of the analysis indicate that the aggravating flood proneness under the climate change effect will be highly likely in future intervals in the East and South East of the country.

In the third level, using qualitative research methodology and content analysis of the available written documents, the latest status of the floods in Iran are examined. In this section, in addition to addressing the country’s insurance industry challenges encountering natural disasters especially flood and the future opportunity of the insurance industry, some strategies are recommended for tackling flood insurance challenges.

Finally, compiling the three sections, a comprehensive analysis is provided that addresses the subject and the necessity of developing flood insurance in Iran in order to make it agenda-based and having a special focus for any natural peril under the auspices of the Universal Natural Catastrophe Insurance Fund. This is however, considered the first and foremost step in initiating the flood insurance project hence leading to consider insuring other natural perils in a similar way.

The Persian full text of the research report is available at this link.