Academic Thesis for Master's Degree
Field: Business Management, Insurance Orientation
Abstract
Privatization and liberalization were the solutions that were strongly recommended to various countries in the 1980s and 1990s by the International Monetary Fund, the World Bank and other international economic centers to increase efficiency.
Privatization today. It is on the agenda of most countries. Since the insurance industry is one of the important institutions of the capital market and the changes in insurance efficiency have a significant impact on the growth and development of the country's economy, in this research, an attempt has been made to investigate the effects of the privatization of the insurance industry on the insurance efficiency in Iran. At first, we will express the definitions, goals, methods, the necessity of privatization of the insurance industry and the experience of some countries in the field of insurance privatization. Then we will introduce two indices of insurance penetration and per capita insurance premium as important indicators of the efficiency of the insurance industry. In the two models given, we show that the nationalization of insurance in the years after the revolution has reduced the efficiency of the country's insurance industry. Also, the war has had a negative impact on these two indicators. At the end of this research, we come to the conclusion that with the implementation of the privatization process, the efficiency of the insurance industry will increase. And it should be noted that in order to advance the privatization of the insurance industry, the privatized insurance companies must operate under the supervision of the central insurance. Key words: privatization, insurance industry, insurance penetration rate, per capita insurance premium. or the control of economic enterprises from the government to the private sector".
Privatization is a strategy that has been used in the fight against inefficiency in a wide range of countries and has produced different results according to the existing fields in each country and their power of action. In order to hand over state-owned companies to the private sector, the social, political and economic conditions of each country must be taken into account, and then planning before privatization, planning during privatization, and planning and management after privatization should be taken into account. Today, one of the reasons why the privatization process is taken more seriously is the issues related to world trade and joining the WTO[1], one of the conditions for joining this organization is the reduction of government support for economic enterprises and economic freedom.
Also, in order to be present in this market, one must have high competitiveness and domestic companies must achieve high efficiency and productivity in a competitive environment in order to be able to compete with foreign competing companies. [2]
The country's insurance industry, as one of the country's financial institutions, has a special place in the process of privatization, so that the efficiency of this industry in allocating its available funds will stimulate other economic sectors. In fact, the small amount of money poured into insurance companies by policyholders constitutes huge sums of money that turn large economic wheels.
Since the two indices of insurance penetration and per capita insurance premium have been identified as affecting the efficiency of insurance in the world, we also examine the effect of privatization on these two indices to examine the efficiency of insurance, based on the stated assumptions.
1-2) Statement of the problem
In the 1980s, the world witnessed a series of changes in the public sector, including unprecedented cost reductions, efforts to increase efficiency, and various forms of privatization. In most developed countries, public institutions have long existed as an important part of the public sector, and the process of privatization has reduced its size and importance. First in developed countries and then in developing countries, the privatization of government and public institutions has become a global movement. Until 1987, about 57 countries have handed over all kinds of public institutions to the private sector. International institutions such as the World Bank and the International Monetary Fund have promoted and encouraged privatization as part of their lending and aid programs. The main idea and thinking of privatization is that the competitive environment and the system governing the market forces private companies and units to perform more efficiently and appropriately than the public sector.(Hanifzadeh, 1389) The World Bank supports privatization in line with its general goals of economic development and poverty reduction. According to the statistical yearbooks of the country, two important indicators with which the efficiency of the insurance industry in the world is measured, in Iran, in the years when the insurance industry became state, compared to the countries of the world region, it has a low rank, which shows the poor efficiency of this industry. (Amir Arslani, 1379) An efficient private sector can help a lot to achieve these goals and privatization accelerates this. It seems that if privatization is implemented correctly, it will increase efficiency, encourage investment and create economic growth and employment, and will free government resources for infrastructure and social programs. In general, the goals of privatization can be divided into two parts: primary goals and secondary goals. The primary goals are: reducing the size of the public sector through ownership and economic control, increasing the efficiency of economic institutions, reducing the budget deficit and national debts, and finally increasing competition. revenues and finally adjustment of subsidies and prices.
Privatization in Iran as a necessity to improve the economic situation, shrink the government and increase the efficiency of production and services, has been the focus and emphasis of the officials and economic and political thinkers of our country since 1368 and after the imposed war. Currently, various economic sectors of the country are under the control of the public sector (government). While it seems that the presence of the government in economic activities is justified if, firstly, the private sector is unable to participate in those activities or does not have the necessary motivation to participate in those activities. Secondly, the presence of the government in those activities, in addition to the profit motive, should be justified from the aspect of national and general needs and interests of the country. On the other hand, due to the fact that the growth of the insurance industry in any country indicates the development of that country and the increase in national savings (resulting from insurance premiums received). Therefore, the increase in competition, which is created as a result of the privatization of the insurance industry, can lead to the diversification and development of insurance services and activities, the increase of the efficiency indicators of the insurance industry, the adjustment of regulations preventing privatization, the increase in the allocation and productivity of the labor force, and the transparency of information, etc. The first goal of privatization in the insurance industry is to redefine the role of Iran's central insurance so that it can deal with its core and main tasks. Among these tasks is to improve the effective and efficient performance of the insurance industry for the benefit of the public while leaving the private sector free for more efforts. Another goal of privatization in the insurance industry is to attract foreign sector investments as well as attract new technologies, management skills and finally new partners in order to grow and develop economic insurance companies. Privatization makes the economic-insurance companies free from the budget restrictions and political interference of the government, and during the collection of private capital, they find the possibility to provide themselves with new allies.
Of course, the privatization of the insurance industry becomes more important and necessary when we find out that the insurance industry in each country by producing high insurance premiums can also bring national and economic growth as a factor in the formation of economic investments. Today, the insurance industry is one of the most essential economic sectors of any country, which carries out important duties and functions. Commercial insurance institutions are one of the financial institutions that, in addition to their effective role in ensuring the economic security of capital, in creating financial resources in the time intervals of receiving insurance premiums and paying damages, especially in long-term insurances, they can cause mobility and dynamism and development of financial markets, and with the accumulation of capital and their modern management, they can provide the necessary grounds for productive economic growth. In our country, insurance is one of the most important factors in preserving and guaranteeing capital. This important industry, on the other hand, provides the welfare of more people in the society by providing appropriate services.