The Central Insurance of Iran, the regulatory body of the sector, has signed an agreement with the Iran National Innovation Fund and the Iran Biotech Development Council to launch a fund for boosting investments in insurance startups.
Majid Behzadpour, the CII chief, said the agreement is a major step toward attracting investments into knowledge-based services in the insurance sector.
“We had signed a deal with the Vice Presidency for Science and Technology in June … The agreement signed today is the first move to put the plans into practice,” CII’s website quoted him as saying on the sidelines of the signing ceremony.
“Today’s agreement is aimed at supporting investments in insurance products that cover biotech and healthcare solutions,” he added.
The official noted that several projects are awaiting investments in this area.
Last week, Behzadpour announced that the CII had plans to create a special fund to help finance innovative projects.
"CII will continue to support the use of advanced technologies in the sector … We intend to set up a fund to this effect and augment the recently-established innovation center," he said.
Behzadpour stressed that CII, as a state organization, does not intend to intervene in the working of insurers but "seeks to play the role of an accelerator for insurtech solutions and help promote creative services in the industry."
CII recently launched its long-awaited innovation center, which reportedly will not seek investment but focus on attracting new talent to find innovative solutions for the insurance industry.
“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 structure, procedures and products,” he said.
Insurance companies have closely collaborated with the regulator for developing innovative packages to build and expand services.
Rising Profile of Startups in Insurance Sector
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-based enterprises by the government with an estimated 5 trillion-rial investment.
The government last month approved new rules requiring CII to create policy mechanisms for supporting insurance startups. It obliged CII to prepare the infrastructure to optimize supervision and payments, improve creditworthiness and risk management systems, create instruments in accord with knowledge-based insurance products and set up a central gateway for startups to market their services.
However, the parliamentary board responsible for monitoring the government ratification’s compatibility with the law has rejected the mandate entrusted to CII for supporting insurance startups and online brokers.
It said that according to the insurance law, the High Council of Insurance has the final say on regulation guiding the insurance industry and therefore, the government-appointed digital economy working group was not qualified to approve any rules in this regard.
Robust rules were devised for CII’s establishment of innovative insurance companies in collaboration with the Vice Presidency for Science and Technology within three months.
CII was mandated to rewrite regulations in a way that offers more space to innovative insurance solutions, especially knowledge-based companies.
It also called for revising regulations to help promote investment in insurance startups.
The Economy Ministry was tasked with submitting a quarterly report on CII's performance to the Vice Presidency for Science and Technology.
There has been a prolonged dispute between the insurance regulator and online insurance companies, known as online brokers, mostly over CII's recent move to create a central gateway for online insurance operations.
CII had 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 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 unsecure.
CII, however, denied the claims and said, "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."
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 policies deposit their premium in 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 support for knowledge-based firms, as it paves the way for illegal activities.
