Economy, Business And Markets

Insurers Struggle to Retain Market Share

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Shortage of well-trained agents who can sell transportation policies is another major issue for the companies.Shortage of well-trained agents who can sell transportation policies is another major issue for the companies.

Eight months after the lifting of the sanctions, Iranian ships are gradually getting coverage from international P&I Clubs–a privilege denied during the sanctions years that hit many industries including the shipping and cargo.

This, however, is seemingly not good news for domestic insurance firms which, uncontested by foreign rivals, got the lion’s share of transport insurance, particularly marine coverage. This is reflected in their portfolios, which has seen their share in transportation insurance dwindle as sanctions were lifted.

Data from the Central Insurance company of Iran’s Sanhab– an online database of the insurance industry– shows a 16.8% decline in the insurance firms’ total premium in the transport category in the past financial year that ended in March.

Iran Insurance Company, the state-owned behemoth, had 17.26% of the market, but a year-on-year comparison indicates a massive 26.44% fall in IIC’s total generated premiums in the transport category.  

Alborz Insurance and Dana Insurance -- the other big insurers -- also saw their share decline by 5.7% and 23% respectively. The only exception was Asia Insurance (which saw its share inch up 2%).

The loss ratio of the category also stood at 22.17% during the twelve-month period, down by 3% compared with the same period last year, meaning insurers paid less claims overall.  

 Fewer Claims

Insurance industry’s Q1 data (March 20-June20) also indicates a 66.71% y/y drop in IIC’s generated premiums in the transportation category (when sanctions were eased) , although the company was able to sell more policies , at 20%,  during the three-month period

The industry’s total generated premium fell 1.87%, compared with the same period last year. The total claims in the transport category also dropped by 14.5% in the first quarter.

However, policymakers in order to support insurers, have allowed them to form partnerships with foreign reinsurance companies to share their risks.

Rouzbeh Mokhtari, secretary of the  Shipping Companies Association, believes that domestic insurers must be supported in the post-sanctions era because “they did their best to support the industry during the sanctions era.”  

In th post-sanctions, Iranian insurers are losing the market share to foreign firms, according to Mokhtari, “but it is a good thing that they are allowed to interact with foreigners.”

CII data shows that insurers sold 221,510 transport policies during the last fiscal year, whereas the number was 249,817 in 2014.

 “Iranian insurers offer a comprehensive form of insurance that is unique in the world,” he said, “The comprehensive coverage they offer has helped us solve many problems, especially coverage for trucks that make an empty return trip (without cargo).”  

 Stumbling Blocks

Rivalry from foreign firms is not the only challenge domestic insurers face in their effort to increase their share of transportation policies. Lack of skilled and trained agents who can sell transportation policies is another major stumbling block.

“Only a certain number of experienced agents and brokers are able to sell transport insurance policies, others are not familiar with this category and cannot speak a foreign language,” Fereshteh Tariverdi, deputy for transportation insurance at Arman Insurance Company told

“Moreover, fluctuations in hard currency prices, smuggling, insurers undercutting each other and the large number of insurance companies in the market, are other constraints.”