The insurance industry regulator says more insurance companies is a necessity for increasing the penetration rate of insurers and enhancing service quality, head of the Central Insurance company of Iran (CII) said.
"We have received many requests for the establishment of new companies and some have been approved," Gholamreza Soleimani said in a meeting hosted by the Financial Tribune's sister media, EcoIran TV on Clubhouse.
"Licenses were issued for applications compatible with our policies. We also approved some reinsurance companies, specialized life insurance companies and general insurance firms with innovative plans to empower the industry."
Presently 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 was given a license by the regulator and will make debut soon. It will be Iran's third reinsurer. Pars Reinsurance Company, affiliated with Parsian Bank, is the fourth to acquire a permit. Tehran Reinsurance Company will be the fifth of its kind in Iran and the third to be founded in the calendar year that ends in March.
US sanctions plus growing demand for reinsurance prompted investors and insurers to establish new companies. The council also granted a permit to Charisma Life Insurance Company -- the third life insurance company. Two specialized life insurance companies are operating in the market, the Middle East Life Insurance Company and Baran Life Insurance Company.
Promoting specialized insurance companies is one of the measures crafted by the CII to shift insurers' focus from the auto and medical segment to more profitable and innovative spheres, especially life insurance that has not been popular.
The top body of the industry also granted license to two new general insurance companies, Bamdad Insurance Company and Hamvatan Insurance Company, according to Risknews.
Market observers, however, say the industry does not have the capacity for more players, at least not in the present economic climate.
Referring to research on the potential for growing the insurance sector, Soleimani said it is still capable of hosting new players, "New players are vital for increasing the penetration rate of insurance services." The newcomers should have strong financial prowess, he added.
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 ($8.69 million), according to a report seen on the government’s website earlier in the week.
Existing insurance companies are also required to enhance resilience and increase their capital before the current fiscal year is out in March.
