Economy Minister Farhad Dejpasand says the insurance industry has come of age and can be fully managed by the private sector.
Speaking at an insurance event Wednesday, Dejpasand said all insurance companies can be divested to private sector after a transitional period, adding that Iran’s insurance sector is now able to cover risks worth $500 billion.
“Except for the Central Insurance company of Iran, which is the regulatory body of the industry, the remaining can be reassigned,” he told a gathering at the iconic Milad Tower in north Tehran.
Dispensing insurance companies to private ownership will be a major step in the right direction and help growth across sectors, he said.
Although most insurance firms are privately-run, more than 42% of the market during the last fiscal year (March 2018-19) was owned by two companies over which the government has control.
From the 30 plus firms in the domestic insurance industry, Iran Insurance Company is exclusively owned by the government. The government also has 20% stake in Alborz Insurance Company.
“Today we can say that only one company is totally state-run and the government has 20% stake in another firm, which is being offered the private sector,” IRIB news portal quoted him as saying.
Last fiscal year IIC sold more than 27.4 million policies accounting for 34.5% of the total premium with 156 trillion rials.
Asia Insurance was the leading private insurer in terms of premium accounting for 9.8% of the market. Dana and Alborz insurance firms were next with 6.9% and 6.5%, respectively.
Dejpasand’s statements come in contrast to earlier comments by Mohammad Rezaei, a board member and acting director of IIC, in October, who had announced plans to expand ICC market share to 50%.
Rezaei said restricting IIC operations in the market is uncalled for and would be irrational.
IIC domination of the local market has been among key concerns of private insurers. IIC controlled over half the market up until the recent past, giving rise to fears of monopoly and unfair competition among industry participants.
The CII has been trying to curb the market share of the only state-owned player. In September the company said it plans to increase capital from 34 trillion rials ($272 million) to 100 trillion rials ($800 million) before the current calendar year is out in March 2020.
Online Services
Another keynote speaker in the event, the CII boss Gholamreza Soleimani, said insurance companies can offer insurance cover electronically.
“From today [Wednesday] 15 insurance firms, which represent 80% of portfolios in third-party vehicle insurance, medical insurance and fire insurance can sell insurance policies online.”
He spoke of the participation of 115 knowledge-based companies in the rapidly growing insurance sector to help it achieve what he described as “smart insurance” business.
In October the High Council of Insurance announced frameworks for regulating the activities of online insurance agents according to which "Official Online Broker License" allows insurance policy sellers to function on behalf of insurance companies, offer price comparison services and make online billings.
In July, Soleimani said the startups would be able to handle 10% of the domestic insurance market. According to the senior insurance official, the domestic insurance market was worth 450 trillion rials ($3.5 billion) in the last fiscal year (March 2018-19) and insurers prefer insurance startups handle 10% of the growing market.
