The Central Insurance company of Iran (CII) has launched its long-awaited innovation center to promote innovative solutions for growing sector.
Speaking at the opening ceremony of the center on Wednesday in Tehran, Majid Behzadpour, the CII head, said that the center will not seek investment but rather focus on drawing new talent to innovate the insurance industry.
“We have held weekly innovation discussions for ten weeks. What indeed is a source of inspiration is the fact that most of the services introduced in the sessions are being sold in the market and are [already] used by insurers,” Risknews quoted Behzadpour as saying.
“The goal is to institutionalize the move towards innovative services across the industry. We want to see the impact of technological progress in all aspects of insurance companies namely their structure, procedures and products.”
The official noted that the CII has signed agreements with the Vice Presidency for Science and Technology, the Ministry of Health, and the National Development Fund of Iran to boost investment and finalize joint projects.
During the ceremony, some innovative insurance products were unveiled including a Takaful package.
Insurance companies have been in close collaboration with the regulator for developing innovative insurance packages to build and expand services in the rapidly growing industry.
One company was reportedly finalizing a ‘Takaful’ insurance package, which should have a considerable impact on the insurance penetration rate.
Takaful is a type of Islamic insurance wherein members contribute money to a pooling system to guarantee each other against loss or damage.
Takaful-branded insurance is based on sharia or Islamic religious law and outlines how individuals are responsible to cooperate and protect one another. The Takaful system covers health, life, and general insurance.
"Insurance packages for [home] rentals and down payments, liability insurance for managers, gold-based life insurance, insurance cover for machinery/equipment and insurance for cycling are in the pipeline and will be offered soon," Behzadpour said.
It was announced earlier that Amin Re, a leading reinsurer, had applied for starting Iran's first Takaful insurance company on the Persian Gulf Kish Island.
Missed Targets
Economy Minister Ehsan Khandouzi was present at the ceremony and commended the industry for focusing on Takaful. “Unlike 40 countries that have been using Takaful solutions for years, we never had this service in our country. I hope we too make progress in this sector.”
Elaborating on the Sixth Five-Year Economic Development Plan (2016-2021), Khandouzi said, “Unfortunately, we could not meet the targets enshrined in the plan vis-à-vis the insurance sector, especially in terms of the penetration rate and investments.”
The Sixth FYDP had called for 21% annual growth in investments for the insurance industry, but data show that the average annual investment in the sector was down 3%.
The sector was supposed to increase the share of life insurance premium income to 50%. This segment barely accounted for 15.3% of the premium income by the end of the FYDP. Data also show the share of life insurance in the industry’s collective portfolio increased by 0.4% on average.
A key goal of the national plan was to boost the sustainability of insurance income and improve their financial clout. The FYDP obliged insurance authorities to “take appropriate measures to expand the penetration rate of the industry by 7% during the five years.”
Data show the average annual growth of only 0.2% in the penetration rate and 2.52% by the end of the plan period.
The industry regulator says it has taken measures to fulfill the targets, namely promoting specialized life insurance companies and giving more leeway to insurers to raise investments by expanding the life insurance segment.
