Insurers affiliated to banks topped the list of general insurance firms able to cover losses, according to the latest ranking published on the Central Insurance company of Iran (CII).
The CII has compartmentalized insurance firms into different levels. Rankings are subject to a key metric, the Solvency Margin Ratio (SMR) -- the capacity to cover risk.
Except for Asmari Insurance Company and Sarmad Insurance Company, with Level 2, all others were elevated to Level 1 for the fiscal year to March 2022, which means the companies were capable of meeting their financial commitments to clients.
Pasargad Insurance Company, affiliated to Bank Pasargad, topped the list of general insurers, with a solvency ratio of 304. Karafarin Insurance, affiliated to Karafarin Bank, came in second at 262 while Arman Insurance, Saman Insurance and Razi Insurance followed.
The ratio was 519 for Baran Life Insurance Company, and 308 for Middles East Life insurance Company, a subsidiary of Middle East Bank.
The CII list also ranked reinsurance companies based on their SMR, as per which Amin Re was at the top with 917, followed by Iranian Re 308, and Iran Moein Reinsurance 278.
New Ranking System
Most insurance companies were in Level 1 in fiscal 2021-2022 making the metric rather irrelevant for customers wanting to decide the most suitable company.
The CII said earlier that it wants to rank insurance companies based on new criteria to promote competition in the gradually growing market. It said the new system includes 20 new indexes for measuring performance. The regulator did not elaborate.
The need for ranking insurance companies has gained precedence due to the anticipated entry of newcomers.
So far 34 insurance companies operate in Iran including offshore firms and reinsurance companies. The number, including reinsurance, life insurance and general insurance companies, is expected to reach 46 with the regulator saying that 13 new firms are in the pipeline.
However, experts and stakeholders say the industry does not have the capacity for a bigger playing field, at least not in the present difficult economic climate.
Responding to the reservations, the CII head has said, "Licenses were issued (for new companies) compatible with our policies. We have approved some reinsurance companies, specialized life insurance companies and general firms with verifiable innovative plans to empower the industry."
The regulator of the insurance sector seems determined to improve and augment competition. By restricting new operational licenses only to firms that can offer innovative services, the CII wants insurers to come out of their comfort zone and compete with newcomers in offering more personalized, data-driven, innovative and quality service.
