The Central Insurance company of Iran (CII) and the Vice Presidency for Science and Technology signed an agreement Monday to ease the entry of knowledge-based companies in the insurance sector.
The agreement was signed by Majid Behzadpour, the CII chief, and Sorena Sattari, Iran’s vice president for science and technology in Tehran, IRNA reported.
Sattari said insurance is a growth industry despite restrictions and sanctions, "However, it was rather slow in adopting innovative technologies."
"We agreed to set up innovation and creativity centers specifically this sector. This will be a major step in helping transform the industry."
Sattari referred to problems fintech startups faced in the past. "Today insurance startups are tackling with the problems, especially the traditional players' resistance to change."
InsurTech solutions can and will usher important changes in the sector, he noted. "No one can resist innovation."
Behzadpour was positive about the effect of innovative solutions in moving the industry forward. "Innovation centers will indeed make a major contribution in addressing the key challenges."
Knowledge-based insurance companies can improve people's access to insurance services, he recalled. "It will also help us enhance the penetration rate on the domestic front.”
As per the agreement the CII, as the top body of the insurance industry, will create a regulatory sandbox to help innovators explore ideas and business plans before entering the market.
Both sides also agreed to collaborate in revising regulations to make them startup-friendly, create insurance packages for knowledge-based products and services, promote investments in insurtech firms, identify market demand and help startups in product development.
Effective Support
A long dispute has existed between the insurance regulator and online insurers, known as online brokers, mostly over the CII's recent move in creating a central gateway for online insurance.
The CII has ordered all startups to work only with a new firm, Amitis, without contacting insurance companies or brokers. Startups have protested saying that this is in breach of acceptable competition norms.
Startups accused the CII of trying to create a “market monopoly over all transactions made by online insurance firms and setting up a quasi-private company”.
They say the gateways have failed to consider the basics of designing digital products and are highly insecure.
Traditional players in the insurance market backed the CII, saying that online brokers are disruptive and had created financial problems for insurers. Brokers claim that some websites selling insurance policies deposit their premium money in (their own) bank accounts instead of paying it to the insurance companies and usually settle the payments after one year and that too in installments.
Meanwhile, the Vice Presidency for Science and Technology's support for startups and knowledge-based companies seemed to be strong enough to persuade insurance authorities rethink their policies.
Last week, the regulator agreed to revise the operative mechanism of a controversial gateway to make it compatible with startup business models.
The government last month approved new rules requiring the CII to create policy mechanisms for effectively supporting insurance startups. It obliged the CII to prepare the infrastructure to smartify supervision and payments, improve creditworthiness and risk management systems, create instruments in accord with knowledge-based insurance products and a central gateway for services sold by startups.
