Iran Insurance Company, the largest and the only one owned by the government, has raised the ceiling for digital payment of third-party auto accident claims by 14 times, from 500 million rials ($1,800) to 7 billion rials ($25,000).
The major insurer said policyholders have welcomed the move.
"Digital payment of claims has indeed expedited the process of payout settlement and curbed mistakes and miscalculations," Ali Hossein Tahmasebi, the head of IIC financial affairs department was quoted as saying by Risknews.
According to the official, claims are being cleared in collaboration with Bank Keshavarzi Iran.
Third-party vehicle insurance is mandatory in Iran and car owners lacking this type of policy are penalized. It is essentially a form of liability insurance according to which, in the case of accidents the insurer is required to compensate the inflicted party for the physical or financial loss according to the reimbursement ceiling set by the High Council of Insurance, affiliated to the Central Insurance company of Iran.
Almost one-third of insurance revenue comes from the auto insurance category. Generating 204 trillion rials ($1.3 billion), this segment posted annual growth of 39.7% in fiscal 2019-20.
As the only government player in the market, IIC sells 46% of total third-party auto insurance policies and has a 60% share in the total payout for car collision insurance.
However, the monopoly of the state-owned giant is often challenged by other companies. IIC’s largesse in offering discounts on premium and paying higher claims is often seen as an unfair and against free competition.
The CII is persuading insurers to digitalize their processes across the board. The regulator in May 2020 ordered insurance companies to convert all personal auto policies into electronic format.
Insurance companies have been obliged to transfer the process of sale, renewal, and loss payments of personal auto policies to an online platform.
When fully launched, policyholders will have online access to their policy information and receive insurance services without the need for a printed copy of their policies.
