Iran Insurance Company (IIC) and ISACO, a major auto aftersales services company affiliated to Iran Khodro (IKCO), signed a deal on Monday to develop a joint platform for digitizing claims procedures.
Holders of IIC third party auto policy, who also own a vehicle produced by Iran Khodro, will receive a range of services remotely through websites of the two companies when the platform is launched.
“Determining the loss amount and claim settlement will be carried out right at the location of the accident. ISACO will tow the vehicle of the policyholder to certified repair shops for repairs as per the standards of the vehicle producer,” the IIC website said.
“Now that the sale of third-party auto insurance is digitized, compensation of loss should also be online,” said Gholamreza Soleimani, the CII boss.
The process of digitizing insurance procedures began in May when the CII ordered insurance companies to switch personal auto policies to electronic format. Insurance companies were required to move the sale, renewal and claims of personal auto policies to an online platform.
Third party vehicle insurance is mandatory in Iran. It is essentially a form of liability insurance according to which, in the case of accident, the insurer is required to compensate the inflicted party for physical or financial loss according to the reimbursement ceiling set by the High Council of Insurance.
Insurance policy is bought by the insured (first party), from an insurer (second party) for protection against claims by another (third party).
Almost one-third of insurance revenue comes from the auto insurance segment. Generating 204 trillion rials ($1.3 billion) in the last fiscal year (March 2020-21), the category recorded annual growth of 39.7% as more households are owning cars than before.
Insurers reportedly generated 750 trillion rials in premiums since the beginning of the current Iranian fiscal year in March. The share of third-party vehicle insurance, however, is expected to remain unchanged.
Last year insurers paid 33.2 trillion rials in claims, which was 18.18% higher compared to the year before. Personal auto insurance tops the list of insurance categories in terms of share of total claims accounting for 40% of payouts.
The IIC, as the only government player in the market, sells 46% of total third-party auto insurance policies. It has a 60% share from the total payout for auto insurance.
The apparent monopoly of the state-owned player has often been challenged by other companies. IIC largesse in offering discounts on premiums and paying claims, is often seen as an unfair and unwanted advantage.
Automakers usually sell new cars with a free one-year third party policy. Insurers sell such policies to the car company at hefty discounts hoping to make a profit when the policies come up for renewal a year later.
