The Central Insurance company of Iran, the regulatory body of the industry, issued permission for the establishment of a general insurance company last week to improve and expand services.
Farda Insurance, according to Razepool website, is the third general insurance company to enter the rapidly growing market in recent months. HiWeb company, an internet service provider company, is reportedly the major shareholder of Farda Insurance.
The regulator said more insurance companies is a need for increasing the penetration rate and enhancing quality, head of the CII said earlier.
"Our studies show the domestic insurance industry has the capacity for 56 companies," he claimed. "The newcomers should have strong financial prowess."
However, market observers say the industry does not have the capacity for more players, at least not in the present economic climate.
So far 33 insurance companies operate in Iran including offshore firms and reinsurance companies. Amin Re and Iranian Re are the two main specialized reinsurance companies.
Saman Reinsurance Company has a license and will make debut soon. It will be Iran's third reinsurer. Pars Reinsurance Company, affiliated to Parsian Bank, is the fourth to acquire a permit. Tehran Reinsurance Company will be the fifth and the third to be founded in the calendar year that ends in March.
The council also granted a permit to Charisma Life Insurance Company -- the third life insurance company. Two specialized life insurance companies are operating -- the Middle East Life Insurance Company and Baran Life Insurance Company.
Allowing new general insurance firms is not compatible with the CII's long-term policies that are aimed at promoting specialized companies. Measures crafted by the CII to shift insurers' focus from auto and medical insurance to other potentially profitable and innovative segments, especially life insurance, have not been welcomed so far.
Life insurance accounted for 15.51% of industry's portfolio last year, the highest in the history of Iran’s insurance industry. Despite the growth in recent years, the share of life insurance in the overall portfolio is meager and it needs to pick up to help meet targets outlined in the national development plans.
The government last week announced regulations doubling the minimum capital required for establishing insurance companies.
Henceforth the minimum capital for new insurance companies will be two trillion rials ($8.7 million), according to a report seen on the government website earlier in the week.
Despite the hurdles and challenges, the regulator expects growth in companies' premium income to reach 1,100 trillion rials ($4.3 billion) in the current fiscal year that ends in March 2022). Total premium reported in the last calendar year was 820 trillion rials ($3.43b).
