Most insurance companies have stopped issuing personal auto policies, following orders from the Central Insurance company of Iran (CII) to digitize their operations in this category. But it has given rise to new concerns in the sales network affiliated to insurance companies.
The CII, as regulator of the industry, last week told insurance firms to transfer the process of sale, renewal, and issuance claims of personal auto policies to an online platform.
It said as of May 22, clients must be provided access to their policy information and receive insurance service without the previous compulsion of carrying a printed copy of their auto policy while driving.
Representatives of insurance companies' sales network, however, in a letter to the CII called for postponing the ambiguous measure because agents are confused about the workability and operational benefit of the plan.
The letter stressed that shifting to digital policies “should be gradual so that the sales network can adopt to and comply with the new conditions.”
It added that the current state of the industry, due to the massive losses inflicted by the outbreak of Covid-19, is not appropriate for implementing the controversial digital policy simply because they are already confronting real and present challenges.
Insurance agents, brokers, and loss assessors have suspended work since the outbreak of the deadly virus in Iran in February. The suspension came after the CII compelled all insurance firms to conduct their business online.
An estimated 400,000 people are involved in selling insurance policy.
Key Role
Some analysts say the move will not abandon the network per se because most car owners prefer purchasing insurance policies from a trusted agent. Moreover, agents are instrumental for the industry as they directly interact with clients and address their usual concerns.
Slow pace of the insurance industry growth has become a source of concern among stakeholders. The majority of insurance companies have been slow in innovating their business. Setting up a user-friendly platform for buyers in such a short time is a major challenge for most companies, if not outright impossible.
However, hesitation in the process could result in further decline in the companies' premium income simply because mandatory third-party auto policy is the largest source of income for almost all insurers.
Premium generated by selling third-party auto policies reached 179 trillion rials ($1.1 billion) in the first eleven months of the previous fiscal year (March 2019-Feb 2020), up 41% compared to the same period last year.
