53776
Red Ink Threatens Viability of Iran's Top Insurer
Red Ink Threatens Viability of Iran's Top Insurer

Red Ink Threatens Viability of Top Insurer

Red Ink Threatens Viability of Top Insurer

Finance Desk

Iran Insurance Company, the only state-owned insurance firm, has been facing major challenges in recent months, as its share of the market shrinks and its debts mount.  
The chief executive of the company is now seeking help it hit the ground running once again. Mohsen Pourkiani has warned that if no effective action is taken, the giant insurer would have to go under.  
“A variety of problems are eating away at the company. This could  make it next to impossible to get back on its feet as was the case during  the Iran-Iraq war (1980-88) or the sanctions era ,” bankemardom.ir quoted him as saying on Tuesday.
 “The IIC (aka Bimeh Iran) belongs to the people, the government invested 20 million rials ($625) in the firm during inception (1935),” he said, adding that IIC pays 220 billion rials ($6.8 million) in claims on a daily basis.
The IIC recently celebrated its 82nd founding anniversary.
According to CII data, the company now has 40% of the market share. The company lost 15% of the share in the past six months.
“Regular changes in IIC market share have indeed caused instability in the company,” Pourkiani said.
Overdue debts have also taken their toll on the company’s operation. Many organizations owe money to the IIC, said the insurer, with the ministry of education topping the list of debtors.”
“Debts of the Ministry of Education are four years overdue.”
Pourkiani recalled that the IIC is supposed to invest its premiums and use the debt repayments to settle claims. “But we have no money to invest.”
Ministry of Education reportedly owes an estimated 4 trillion rials ($124.8 million) to the CII. The two had signed a contract in 2011 over teachers’ complimentary insurance coverage. However, the ministry decided to sign a contract with another insurance company barely after a year due to the IIC’s high premium rates.
IIC officials, on the other hand, say they have met their commitments during the past four years. “Collectively, we have paid teachers an average of 6 million rials ($187) in claims during the past four years,” says Alireza Zarei, the head of IIC’s department for marketing and business development.
IIC is set to receive 20% of the overdue debts through bonds issued by the government for clearing its debt mountain, he added.

 Automakers
When asked about automakers debts’ to the firm, Pourkiani said: “They do not owe us anything. We are not working with them for some years, due to their bad credibility.”
However, he added that automakers’ debts to other insurance companies are of the ascending order.
Back in March, the Central Insurance of Iran, market regulator, prohibited insurance firms from signing direct contracts with automakers. It was reported that carmakers had failed to clear their dues to the insurers, “making third party insurance a source of net loss.”
Iran Khodro reportedly owes insurance firms an estimated 7-8 trillion rials ($232-$265 million).
Data related to ICC performance in the first half of the Iranian fiscal year (started in March) shows that motor insurance category, insurers’ top source of premium income, accounts for less than 40% of the insurer’s portfolio, whereas the category had 66% at the beginning of the period.
The company has been called to take a leading role in promoting innovative coverage. The company has proved to be a reliable partner of the government for piloting nation-wide insurance schemes, like the natural disaster insurance schemes that were launched recently.
The company has high potential for moving the entire industry forward as it is trusted by most Iranians and has a well-expanded network in  the country with enough human resources.
New and effective support seems vital for enhancing the industry and leaving the company in limbo can endanger its viability and future survival.

 

Short URL : https://goo.gl/Df95Cr
  1. https://goo.gl/lqgcPs
  • https://goo.gl/X4ufm0
  • https://goo.gl/IbXdgc
  • https://goo.gl/8iJuWo
  • https://goo.gl/0AunGA

Add new comment

Read our comment policy before posting your viewpoints

Image CAPTCHA
Enter the characters shown in the image.

Trending

Googleplus