The parliamentary board responsible for monitoring government approvals’ compatibility with the law has rejected a decision by the government requiring the Central Insurance company of Iran (CII) to support insurance startups and online brokers.
It said according to the insurance law the High Council of Insurance has the final say on regulation guiding the insurance industry and thus the government-appointed digital economy working group was not qualified to approve any rules in this regard.
Last August the Raisi administration approved new rules ordering the CII to create policy mechanisms for effectively supporting insurance startups.
"The regulatory body of the insurance industry is obliged to prepare infrastructure to upraise supervision and payments, improve creditworthiness and risk management systems, create instruments in accord with knowledge-based insurance products and a central gateway for services sold by startups," the rules say in part.
Robust rules for the founding of innovative insurance companies was the new function of the CII in collaboration with the Vice Presidency for Science and Technology within three months.
Moreover, the CII was mandated to rewrite regulations in a way that it gives more space to innovative insurance solutions, especially knowledge-based companies.
It also was required to revise regulations related to insurance company investments, especially to help promote their investment in startups.
The Economy Ministry was tasked to submit a quarterly report on the CII's performance to the Vice Presidency for Science and Tech.
There has been an extended dispute between the insurance regulator and online insurance companies, known as online brokers, mostly over the CII's recent move to create a central gateway for online insurance operations
There has been an extended dispute between the insurance regulator and online insurance companies, known as online brokers, mostly over the CII's recent move to create a central gateway for online insurance operations.
The CII ordered all startups to work only with the new firm, Amitis, without contacting insurance companies or brokers. Startups are up in arms saying that this is in breach of acceptable competition norms.
Startups recently accused the CII of trying to create a “market monopoly over all transactions made by online insurance firms and setting up the quasi-private company”.
They insist that the gateways have failed to consider the basics of designing digital products and thus are insecure.
The CII, however, denies the claims. "This company [Amitis] is not for monopolizing the market. The aim is to set up a hub and a gateway for linking applications to insurance company web services," it said.
However, insurance companies and brokers have expressed support for the CII move saying that online brokers are disruptive and have created financial problems for insurers.
Brokers claim that some websites selling insurance deposit their premium in their bank accounts instead of paying them to insurance companies and usually settle the premiums after one year and that too in installments.
The brokers' association called on the government to stop the support for knowledge-based firms as it paves the way for illegal activities.
Hundreds of startups and knowledge-based companies have opened in Iran with some offering insurance services. They account for almost 96% of the total online sales and are recognized as knowledge enterprises by the government with an estimated 5-trillion-rial investment.
