Economy, Business And Markets

Iran’s Insurance Industry: A Progression

Iran’s Insurance Industry:  A ProgressionIran’s Insurance Industry:  A Progression

Friday marked National Insurance Day in Iran-- a day officially announced in 1988 to be added to the annual list of events.

The insurance industry was born in Iran in 1910 with two Russian companies selling insurance policies. Soon afterwards Austrian, British, German and Swiss rivals joined the race to dominate the nascent industry.

By 1931 there were 13 foreign insurance firms operating in Iran when a proposal to establish the National Insurance company of Iran was put forward. It was eventually founded by the government in 1935 with a starting capital of 20 million rials ($664 at today’s exchange rate). Two years later insurance laws were formulated and ratified by the Parliament, ISNA reports.

The newly-founded state-owned company gradually monopolized the insurance industry as it held 75% of the market in 1939. Initially, it only sold  fire and transport insurance but soon added other policies as well. In 1968 the mandatory third-party vehicle insurance was passed into law bringing the company a flurry of new customers.

Today there are 23 active insurance firms with the Iran Insurance Company being the only state-owned insurer. However, it controls half the market that gives it at an advantage over its competitors.

Iranian insurance companies paid their shareholders 7 trillion rials ($231 million) in the year ending March 20. However, the insurance industry’s share return in Tehran Stock Exchange is said to be 11.5% which is much lower than the forex market returns and bank deposit rates.

Iran’s insurance industry, however, has received renewed attention from foreign firms gradually cozying up to the sector parallel to the bright prospects for ending the nuclear-related economic sanctions that, among other things, had crippled the insurance industry.