The Central Insurance company of Iran (CII) has stopped issuing new operation license for online insurance brokers until further notice.
According to Way2pay, the CII's department for new insurance entities, has declined licenses for applicants that had completed all the cumbersome paperwork and were about to receive the operational permits.
The move has disrupted the work of brokers that had already obtained necessary permission but wanted to reestablish their business online.
As per regulations, licensed insurance brokers were also required to revoke their articles of association and approve a new one in accord with online brokerage rules.
In recent years hundreds of startups and knowledge-based companies have opened in Iran with some offering insurance services. They account for almost 96% of the total online sales and are recognized as knowledge enterprises by the government with an estimated 5-trillion-rial investment.
The High Council of Insurance earlier ordered companies to acquire official permit from the CII for online business. It announced a framework for regulating the activities of online insurance agents according to which an “Official Online Broker License" allows them to operate on behalf of an insurance company, offer price comparisons and make online billings.
However, disputes emerged over the collaboration process between online platforms and the insurers.
However, market observers are hopeful that the latest move would help improve conditions for online insurance, as the new head of the CII has talked of promoting digitalization of the sector and support innovators.
Majid Behzadpur, the newly-appointed CII chief, recently said that a special office has been set up at the CII to support insurtech startups.
"We have established a workgroup at the CII specifically for promoting innovation. A bright future awaits startups despite the regulator’s restrictions in the past on tech firms entering the insurance sector."
Observers believe that new licensing has been suspended mainly because the CII is wants to remove deficiencies of the online sales platform, especially the gateway.
The regulator had earlier obliged insurance companies to connect their web services to the CII gateway so that it can be accessed by online brokers.
Behzadpour said earlier that improving resourcefulness is a priority of the regulatory body. "Developing smart platforms can boost efficiency and tops of our plan of action.”
CII “wants to use new technology to diversify insurance products and by extension increase the penetration rate of the industry."
The regulator has said that it wants startups to handle 10% of the domestic insurance market.
