Minister of Economy Ehsan Khandouzi enumerated Sunday his ministry's expectations from the insurance industry in a meeting with CEOs of the insurance companies.
Khandouzi called on insurers to focus on the diversification of insurance products using innovation and technological progress, newswires quoted him as saying.
"Instead of dumping and unhealthy competition in premium rates, insurers need to concentrate on risk-based coverage," he said.
Risk-based pricing means charging rates depending on different risk characteristics, and is a method for raising efficiency in pricing insurance policies.
Using risk-based analytics, insurers can help customers by ultimately lowering the cost of insurance. By doing so, risk-based pricing not only benefits insurers it also reduces expenses for customers.
However, having access to a wide ranging data is vital for implementing data-driven pricing policies. To help insurers in this regard, the minister said his ministry will emphasize the effective connection of electronic insurance platforms, despite the resistance from a variety of quarters.
Digitalization
Digital transformation will remain high on the industry's agenda. "Insurance companies need to digitally offer all the general services."
The regulatory body of the insurance industry has required companies to convert all insurance procedures into digital format by the end of the current fiscal year in March 2022.
The process of digitizing procedures began in May when the Central Insurance company of Iran (CII) ordered the sector to switch personal auto policies into electronic format.
Insurance companies are required to switch the process of sale, renewal, and claims of personal auto policies to an online platform.
A recent study shows insurance companies are showing more interest in developing innovative services to attract customers.
Bemieh-Dari Novin Magazine, a journal that covers the key industry, conducted research in the performance of insurance companies vis-à-vis innovative services, according to which innovative proposals approved by the CII reached 14 in the fiscal year to March 2019.
A review of CII approvals over 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.
