The Central Insurance of Iran will no longer issue permits for general insurance companies, reserving its permits only for specialized insurance entities, announced the planning and development director of CII on Monday.
"There are currently 30 insurance companies active in the country, of which only four companies offer specialized services," said Mehdi Hosseini in a meeting with the Money and Capital Markets Commission of Iran Chamber of Commerce, Industries, Mines and Agriculture.
He noted that in comparison with other countries, it becomes clear that Iran has not yet tapped into its full capacity in the insurance industry and permits can be issued for 20 more companies.
"However, CII will no longer issue any permits for the establishment of new general insurance companies, saving them only for specialized companies," he said.
"We will also allocate loans and incentives for companies offering life insurance."
According to the official, Personal Auto Policies account for 45% of the country's insurance market and dominate the portfolios of insurance companies. Referring to the law pertaining to the PAPs recently approved by the parliament and implemented since last month, Hosseini added that based on the law, insurance companies will be prevented from granting unjustified discounts to customers.
"Insurance companies are allowed to give a discount or increase their premium prices by a maximum of 2.5% and are no longer permitted to undercut each other to gain a bigger share of the market; 20 million PAP contracts have been signed, more than 90% of which include discounts," he said.
Last year, Hosseini said the rate of return in insurance companies stood at 14%, so for the current year, the CII wishes to separate life insurance policies from other categories to reduce the capital level needed to establish a new insurance company.
"Value-added tax must be eliminated from insurances," he said, noting that while insurance services are exempt from taxes in most countries, Iranian insurers find themselves burdened by levies.
"By the end of last year (March 19), about 50.7 million insurance policies were issued in Iran and about 20 million of them were PAPs."
CII is not looking to generate a profit from reinsurance, he claimed, noting that the insurance authority has halved the share of compulsory reinsurance in the life insurance category, bringing it down to 25% from the previous 50%.
Hosseini also said that no limitations have been considered for the activities of international insurance companies in Iran, adding that in the post-sanctions era, a number of big foreign companies came to Iran to hold negotiations, some of which are still ongoing and look promising.
Controversial Amendment
Also speaking at the meeting was Ali Sanginian, the head of Money and Capital Markets Commission of TCCIMA, who identified the amendment to Article 241 of Iran's Trade Law as a highly troublesome regulatory scheme that has become a cause for concern among many private businesses.
"The article was approved in the final days of the previous parliament and if implemented, it will lead to the forced resignation of many board members in businesses and holdings," he warned.
The second act of the article in question states that "no individual can personally, or as a representative of a legal entity, hold the title of CEO and board member in more than one publicly-listed company that is partly or fully owned by the government or a public-sector institution."
According to Sanginian, almost all stock firms will be subject to this amendment.
"About 5,000 CEOs and board members will be forced to resign from their posts if this regulation is approved," he said. "That is while many businesses are already being run without CEOs, in a state of uncertainly," he said.
