Economy, Business And Markets

Innovation in Insurance Needed

Innovation in Insurance NeededInnovation in Insurance Needed

The insurance sector needs innovation and a diversification of products, says the CEO of the Alborz Insurance Company.

“Less than 10 insurance products and services were created in the past decade,” Rasul Tajdar stated. No real innovation has taken place in Iran, with new services being simply imitations of foreign insurance products.

Economic growth has a great impact on the insurance market. “We must understand that if a person is struggling to meet his basic needs, he will not go after insurance,” said the CEO, “Though, some may argue that insurance is a basic need, it is not above the need for food.”

Insurance products can only be deemed a luxury goods if one sees them as an investment as some do compare their return to bank interest rates.

The insurance sector in Iran is underdeveloped and under-competitive, life insurance in particular. Iran’s gross national product is 32nd in the world while its insurance rank is 42nd.

Insurance premium per capita in Iran is estimated to be $84, which is way under the $652 global average – 56 percent of which is spent on life insurance policies – Banker reported. The figure rises to around $3,000 for developed countries like Japan or North Korea with life insurance products taking up 76 percent of the total.

One of the main challenges in the insurance industry is the lack of a talented workforce. “This caused a crisis in insurance firms,” Tajdar said. Unless foreign firms enter Iran and start training employees, no new insurance firm can be established, the CEO of the state-owned insurer added.