Iran’s insurance sector at the crossroads between Westernization and Islamization

Economic development requires insurance as it makes risks more manageable and thereby permits resources to be allocated more productively. European in origin, the concept of insurance does not have a genuine counterpart in classical Islamic law, so its reception has been haphazard in the Muslim world. Some countries, such as Sudan, have completely Islamized their insurance sectors, prohibiting conventional insurance. Others, such as those in the Gulf, have embraced Western regulatory practices. Iran’s economy, in particular, has suffered from the underperformance of its domestic insurance sector and its exclusion from international insurance markets through sanctions, especially maritime insurance for hydro-carbon shipments. Examining the role of the undersupply of insurance services, this presentation seeks to shed light on some of the underlying regulatory causes of the current economic malaise, especially the role public law has for the development of the private sector.