Robert Easton, head of Treaty UK and head of Iran, Matrix, talks with Monte Carlo Today about the growth opportunities he sees in Iran.
Why choose Iran to develop your office network?
As part of our diversification process, Iran represented a great fit for Matrix in the targeted EMEA business region and also complemented our existing operations in Athens, London, Cyprus, Turkey and South Africa. With about 200,000 billion+ Iranian rials of annual insurance premiums (about $7 billion) and loss ratios which are excellent across the majority of classes, interest from markets previously blocked by sanctions is understandably high. With global reinsurance rates generally depressed it is little wonder that reinsurers are now looking to Iran not only as a diversifying interest but also as a new source of profitable revenue.
What is life like in Iran now the sanctions have been largely lifted?
Having recently travelled to Tehran, my first impression was not one of decline and deprivation but the contrary: a vibrant city which seems to have come on leaps and bounds despite the lengthy embargo.
Insurance is I believe a great barometer of how well an economy is really doing and clearly, with some $7 billion of premium generation things are nothing like we might have imagined.
Construction has continued unabated with many new office blocks being erected, and BMWs and Mercedes are as prevalent in Tehran as they are in any other major city.
The sanctions did of course hurt Iran financially, but they also served to make the Iranian people far more independent and determined that they would never again leave themselves exposed to the effects of such restrictions. This means that the basis for outsiders doing business in Iran has changed and to do so successfully requires a local partner with a controlling stake in that business—hence Matrix investing in the region by opening an office in Tehran which is staffed 100 percent by very well connected and experienced Iranian nationals.
What hasn’t changed is the most welcoming nature of the Iranian people who are as ever very much open for business and ready to embrace trading relationships with the rest of the world—something which we hope will be good news not only for Matrix but for the insurance industry too.
How do you see the future?
With investment now set to flood back into Iran and with oil being freely traded, the prospects for the future are truly breathtaking. From an insurance perspective growth has already been impressive and there are currently some 28 Iranian private insurance and reinsurance companies plus one official governmental insurance company—Iran Insurance Company—which accepts upwards of 50 percent of all risks.
The market is very well regulated by Bimeh Markazi (Central Insurance of IR Iran) which was founded in 1971 for the purpose of regulating, expanding and guiding insurance companies in Iran. In parallel with its regulatory and supervisory duties, Bimeh Markazi receives a compulsory session of all business and also conducts both inwards and outwards reinsurance business in the national and international markets.
Under current legislation, all companies are obliged to cede 15 percent of non-life business and 25 percent of all life business. Additionally, in the event of any company purchasing international reinsurance (including fac), a share must also be offered to Bimeh Markazi of up to 30 percent.
How can Matrix differentiate itself in the Iranian Market?
As a Lloyd’s broker we are very proud to have taken the initiative to invest in Iran. We firmly believe that our experience and international connections will help the local market through our collaborative and highly innovative approach. We are very strong in financial lines and believe that there is a huge potential for us to assist the local insurance companies in their quest to support the Iranian banks as they endeavour to power the expected growth in the economy during the ensuing months and years.
In my opinion many of our larger competitors have been too quick to pour scorn on the prospects for Iran. From where I see it they would rather hide behind a veil of uncertainty than invest as we have done, in the firm belief that Iran will one day soon represent a jewel in our growing crown.
Robert Easton is the head of treaty UK and head of Iran, Matrix. He can be contacted at: email@example.com
Matrix, Robert Easton, Middle East, Europe, Monte Carlo Rendez-Vous 2016