A recent study shows that insurance companies are now more interested in developing and offering innovative insurance services.
Bemieh-Dari Novin Magazine, a journal that covers the insurance industry, conducted research in the performance of insurance companies vis-à-vis innovative services, according to which the innovative proposals approved by the Central Insurance company of Iran reached 14 in the fiscal year to March 2019.
A review of CII approvals in 15 years shows that the average number of innovative insurance services offered barely exceeded five each year. The CII okayed 15 innovative plans during the period under the review.
Most of the new solutions were related to vehicle, medical, liability and accident categories.
The study also shows that transforming the accident insurance category was the main focus of insurance companies between 2007 and 2011. It centered on vehicle insurance categories in the next two years. However, innovative solutions related to medical insurance cover outnumbered other segments after 2013.
Insurers showed little or no interest in rewriting business plans for the transportation, money, marine, aviation and energy insurance sectors.
Iran’s insurance companies generated 817.3 trillion rials ($3.43 billion) in premium income in the last fiscal year (March 2020-21) posting 37.8% growth compared to the year before.
Medical insurance was the second major source of income. Companies sold 576,300 medical insurance policies to make 156.4 trillion rials ($657 million) last year (ended in March). The number of sold policies, however, showed an annual decline of 85.4%. But premium income in the category was 15% higher than the previous year.
Figures also indicate a growing tendency in innovative life insurance solutions. For the first time in the industry's history, three proposals related to this category managed to get CII approval in the year to March 2019.
The life insurance segment generated 126.8 trillion rials ($532.7 m) during the year to March 2021, up 44.4% year-on-year accounting for 15.5% of insurance companies' portfolio. Insurance and life insurance companies sold 7.14 million life insurance policies last year up 4% year-on-year.
Iran Insurance Company, the sole government insurance company and the largest in the country, accounted for the highest portion of innovations -- 21.15% -- during the 15-year period. Sina Insurance and Mellat Insurance companies were next with 10% and 8% share, respectively.
Comprehensive insurance for drivers in Iraqi Kurdistan, comprehensive insurance for rural residents and insuring foreign tourists are among innovations developed by the IIC.
A Pressing Need
The insurance industry regulator has long called for expanding innovation in the industry seeing it as a need for increasing the penetration rate of insurers and enhancing service quality.
The regulators' move to increase the number of insurance companies is in line with policy to boost innovation in the rapidly growing sector.
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.
Recently three reinsurance companies, two life insurance companies and two general insurance firms got permits from the CII. The new firms will focus on innovative technology.
The outbreak of Covid-19 could also be seen as a wakeup call for insurance companies. Insurance experts believe that there is space for insurance companies to salvage their Covid-hit business. Insurers can and should diversify their portfolios and embrace innovation to be able to grow, they say.
Insurers can also offer special packages for online businesses, SMEs, and low-risk investments to overcome major future challenges.
