The first vice president called for the active participation of insurance companies in the stock market, on the occasion of the 21st national and seventh international conference on ‘Insurance and Development’ which was held on Thursday at the IRIB International Conference Center.
“The bourse is the best place to develop liquidity,” Es’haq Jahangiri said.
Criticizing the minor presence of the industry in the capital market, he said that once the stakeholders in the market are assured that the insurance industry covers their risk, they will certainly prefer to invest their money in the stock market rather than put them in banks as deposits.
The involvement of insurance companies in the bourse creates confidence in its stakeholders about the stock price fluctuations, he said, adding that “currently 6,500 trillion rials ($242 billion) of liquidity is owned by people.”
The money can contribute to the development of the country if it is invested in the stock market, Jahangiri added, saying that to do so, the role of the Central Insurance Agency as the supervisory regulator must be enhanced.
New methods of marketing, management, measurement, and assessment of the industry have excluded the insurance industry from the realm of traditional industries, according to Jahangiri.
The approach of the Fifth Five-Year Economic Development Plan is to facilitate participation of foreign insurance companies in the industry in a bid to enhance competitiveness, he said, adding that the fact that the insurance industry is in the hands of the government has damaged the industry.
He called on the specialists in the industry to help the government formulate a future “Sixth Plan” through accurate assessment of the industry’s status.
Insurance Exemption From VAT
A value added tax amendment bill has recently been finalized by the ministry of economic affairs and finance, which exempts the insurance industry from paying VAT, said the economy minister elsewhere in the conference.
“The bill is ready to be submitted to the government now,” Ali Tayebnia said.
Also, the establishment of five new specialized insurance companies is on the agenda, as specified in a strategic document devised by the ministry of economy in a bid to enhance the capacities and capabilities of insurance companies, said the minister.
He added that to further develop the insurance industry, the strategic document calls for new players to enter the industry.
The minister also underlined the need to increase the contribution of voluntary insurance schemes such as life and supplementary insurance in the industry. He also called for a more prominent role on the part of the private sector in the field.
Diagnosing Deficiencies
Insurance experts have had the least involvement in formulating insurance regulations, said Mohammad Ebrahim Amin, the managing director of the Central Insurance Agency.
“This is why some of the decisions made in the industry do not adhere to insurance principles,” he added.
If insurance companies want to increase their share in the market, “they need to be customer-oriented,” he said, adding that managers of insurance companies who fail to do so lack the required skills to properly do their jobs.
