Insurance companies sold nearly 18 million life insurance policies in the four months of the current fiscal year that started in March, up 17.79% year-on-year.
Life insurance accounted for 15.83% in the four-month portfolio. Insurance companies generated 50.2 trillion rials ($184.5 million) in life insurance premium, data released by the Central Insurance company of Iran showed.
Insurers paid 15.2 trillion ($55.8 million) in claims during the period, up 30% year-on-year, for 307,165 cases. The payout ratio in the category was 30%.
After months of delay, the regulatory body published a report on the performance of insurers according to which they collectively generated 317.2 trillion rials ($1.16b) in premium in the four months.
Founding and promoting specialized insurance companies was one of the measures devised by the CII to shift insurers' focus from auto and medical insurance to more profitable and innovative cover, especially life insurance that had not been very popular in the recent past.
The mandatory third-party vehicle insurance remained the main source of premium income. Insurers sold 6.96 million third-party auto insurance last year worth 113 trillion rials ($418 million), recording a 45.9% growth in value but 0.9% decline in total policies sold.
Medical insurance was the second major earner. Companies sold 262,600 medical insurance policies, making 56.7 trillion rials ($210 million) in the four months. The number of policies sold showed an annual growth of 199% but growth in premium income of this segment was 23.3%.
The data did not include details on the overall performance of insurance companies.
Currently, two specialized life insurance companies are active in Iran, namely Baran life Insruance and Middle East Life Insurance. The regulator recently authorized two firms, Karizma Life Insurance and Hamerz Life Insurance. Isatis Life Insurance Company is also expected to join soon.
Need to Catch Up
Life insurance penetration rate in Iran is 0.3% which is much lower than the 4.2% and 3.3%, respectively, reported for advanced economies and average life insurance penetration in the world.
The Majlis (parliament) recently called on the industry to boost life insurance revenue from the current 12% to 50% of its total revenue by the end of the Sixth Five-Year Economic development Plan (2016-21), which seems to be highly unlikely considering the brutal coronavirus pandemic and the state of the economy.
Recent studies show there is doubt over the sustainability of life insurance premium. Households are apparently less likely to be able to afford costly life insurance on a regular basis, which could add to the insurers’ discomfort.
Observers believe that insurance agents' lack of familiarity with life insurance and their inability to present it professionally to the public is one of the key hurdles to the sector's growth. "There are some potential policyholders out there who can afford life insurance," Ghulamali Sobat, a member of the High Council of Insurance said recently.
"Agents need to have all the necessary financial skills, understand customers' needs and offer the most suitable coverage.”
