Despite all the progress in recent years, life insurance sector in Iran still falls short of the expansion targets. Insurance authorities believe that insurance firms need to accelerate their progress towards increasing the share of the advantageous sector in their portfolio.
Insurance and life insurance companies generated 146 trillion rials ($554 million) from life insurance policies during the ten months to January 21.
The Central Insurance company of Iran, the regulatory body of the industry, said life insurance now accounts for 16.2% of the sector’s total premium income -- a nominal growth from the 15.5% in fiscal 2020-21.
CII data showed 47% growth in premium from the life insurance segment in ten months under the review, compared with the same period last year.
Mehrdad Rezaei, head of CII’s department for supervising life insurance, said the sector has high potential for attracting clients despite some hindrances.
“Generally, the public is showing more enthusiasm in life insurance policies. However, insurance companies need to sharpen their focus on innovation to address market demand,” Rezaei said.
Insurance and life insurance firms have new plans to increase sales, he noted.
The regulator has been trying to promote retirement insurance policies as it could help plug gaps in state-run pension funds, he said, adding that policymakers for now have no plans to oblige the public to buy retirement insurance policies.
Rezaei says the CII received more than 100 complaints related to the life insurance sector in the past ten months.
Majority of the complaints were related to malpractice by life insurance firms’ sales network. “Policyholders claim that the services they received from insurance companies were much different from what was expected.”
“Policyholders are given almost no information about the policies they buy, whereas the sales networks have all the details. Insurers must provide buyers with complete and authentic information about the policy terms.”
A part of complaints was about the settlement of payouts by insurance companies.
Data show insurance companies paid 47.8 trillion rials ($180 million) in life insurance claims, up 46% year-on-year, for 830,000 cases during the ten months.
Call to Improve Revenue
The parliament has called on the industry to raise the bar and boost life insurance revenue to 50% of the total revenue, which seems unlikely in the present economic climate, market observers say.
The growth in life insurance premium turned out to be contrary to earlier expectations about the sustainability of premium income during the brutal coronavirus pandemic. Households were and are less likely to be able to afford costly life insurance.
As such, insurers are exerting extra effort to promote the sector in recent months. The CII recently reported increase in the number of agents specializing in life insurance by 12.9% reaching 44,300.
Thus far two specialized life insurance companies are operating in the local market, namely Middle East Life Insurance and Baran Life Insurance. The number is expected to reach five with the regulator granting license to three life insurance firms.
