Total premiums grew by over a third in the six months ending September 22, compared to the same period last year. The high growth rate in the insurance sector came despite the financial sanctions that have slowed down the insurance sector’s development.
Insurance premiums reached 97.8 trillion rials ($3.6 billion based on official rate) showing a 35.8 percent growth for the period, Central Insurance of Iran data shows.
Iran insurance, a state-owned insurer, sold 46.5 percent of the premiums, remaining the dominant power in the market. Other insurers, all non-state-owned, sold 53.5 percent of the premiums.
A surge in premiums is seen in the data, as the number of insurance policies issued only rose 25.3 percent to 21.7 million. While Iran Insurance sold over 60 percent of the policies, it took less than half of overall premiums. This comparison shows that the surge in premiums is related mainly to policies issued by the private insurers.
The life insurance segment of Iran’s market remains weak, with the non-life segment taking up over 65 percent of premiums. Compulsory Motorists’ Third Party Insurance (CMPTL) sub-sector was the key source of growth in the industry, taking up 41.4 percent of the premiums, followed by health insurance with 25.4 percent.
The insurance market also seems to be on the path to high profits, as the rise in insurance payouts was dwarfed by the rise in premiums. Insurance payouts only rose 19.3 percent, totaling 47.1 trillion rials paid over 8.7 million cases.
Iran Insurance has outperformed private insurers in handing out payouts, the data shows. While it took 53.5 percent of the premiums, it only paid for 49.4 percent of total claims.
CMPTL payouts accounted for 39.8 percent of the total insurance payouts in the period. The share of the health insurance segment in the payout market was 32.9 percent.
Future of Insurance
Looking ahead, the relative size of the non-life sector compared to life insurance sector means that it will remain a main source of growth in overall premiums in Iran’s insurance market in the foreseeable future.
Within the non-life insurance sector, CMPTL and health insurance segments are likely to keep their dominance and drive growth as their coverage expands to more policy holders.
Iran Insurance possesses a significant size of the market and is one of the largest insurers in the Middle East. It is likely to keep its position as Iran’s top insurer with its state backing - it is seen as a strategic asset by the government. After Iran was denied shipping insurance due to financial sanctions imposed on the country over its nuclear energy program, Iran Insurance rose to ease the insurance crisis. The company now holds 65 percent of the shipping insurance market.
Despite the surge in premiums the market will continue to operate below its capacity in all likeliness. “An opaque regulatory system, heavy government intervention and a lack of public awareness of the benefits of many insurance solutions” were sighted as reasons behind this lagging growth in a recent report by the Business Monitor International.
Although the Insurance market has shown resilience to continued financial sanctions imposed by the European Union and the United States, the possible lifting of these restrictions would boost Iran’s insurance market. Such a development would draw in foreign reinsurers and investors into the market and will increase access to global capital markets.
