The Central Insurance company of Iran (CII), the industry’s regulator, is concentrating on promoting specialized insurance companies.
Speaking to board members of Iran Insurers' Syndicate, Majid Behzadpour, the CII chief, said it has prioritized licensing only specialized and reinsurance companies, in line with the Economy Ministry's recommendation to the key sector to revise licensing policy.
Promoting specialized insurance firms, mostly life insurance, has long been a goal of the CII. Policymakers are trying to shift insurance company focus from third-party auto insurance sector to more sustainable insurance categories,, namely the life insurance segment.
Over the past two years the CII has supported increase in the number of insurance companies and broaden the playing field.
Gholamreza Soleimani, the former CII boss, said more insurance companies are crucial for increasing the penetration rate and enhancing quality.
As such, the CII has said that 13 new insurance companies are to enter the market, including two life insurance companies, four reinsurance companies and five general firms.
This is while market observers and experts say the industry does not have the capacity for more players, at least not in the present economic climate.
Behzadpour, however, stressed the need for boosting life insurance, which he believes is the key to increasing the penetration rate of insurance industry.
The insurance industry was unable to meet the targets defined in the Sixth Five-Year Economic Development Plan (2016-2021), despite reasonable growth.
It was expected to increase the share of life insurance annual premium income by 50%. This segment was 15.3% higher by the end of the plan period.
The FYDP had called on insurance authorities to take appropriate measures to expand the penetration by 7% in the five years. Data show average annual growth of barely 0.2%. This rate was 2.52% by the end of the plan period.
Currently, two life insurance companies are operating in the market, namely Middle East Life Insurance and Baran Life Insurance.
Other Goals
Ending CII's reinsurance business, collaborating with foreign entities for training Iranian insurers, embracing innovation and promoting competitiveness are said to be the main goals of the CII in upcoming years.
Behzadpour noted that CII policy is to stop its reinsurance operations gradually. As per regulations, insurers are obliged to cede 15% and 25% of all their non-life and life insurance premium income to the CII for reinsurance needs.
The CII reinsurance arm is also set to support the life insurance sector against potential losses due to the US sanctions and the absence of foreign peers.
The CII accounts for about 90% of reinsurance operations in Iran.
He also added that insurance companies need to be completely familiar with advanced scientific and technological developments. "We are working to start joint training courses in collaboration with internationally recognized institutions," he added without elaboration.
He expressed interest in promoting startups in the sector, stressing that CII is keen to curb monopolization.
Earlier reports said in recent years hundreds of startups and knowledge-based companies have opened in Iran with some offering insurance services. They account for 96% of the total online sales and are recognized as knowledge enterprises by the government with an estimated 5 trillion rials investment.
