Two life insurance companies recorded the highest growth in premium income in the first seven months of the current fiscal year that started in March.
According to data released by the Central Insurance company of Iran, the regulatory and supervisory body of the sector, Middle East Life Insurance Company, affiliated to Middle East Bank, generated 1.92 trillion rials ($6.8 million) from 38,564 life insurance policies posting 545% increase in income and 86% increase in the number of policies sold compared to the same period last year.
Baran Life Insurance Company registered 170% increase in premium income at 532 billion rials ($1.88 million) and sold 4,321 policies up 196% y/y.
Despite the progress, the life insurance segment still accounts for a meager portion of total premium income. The two specialized life insurance firms generated only 3% of the total premium in the seven months.
CII data show insurance sector's collective premium income from life insurance policies reached 90.567 trillion rials ($321.1 million), up 44.43% y/y and accounted for 15.06% of the industry's portfolio.
An estimated 4.35 million life insurance policies were sold in the period -- 8.73% higher than the corresponding period last year.
Insurers collectively paid 29.7 trillion rials ($105.3 million) to life insurance claims up 32.96% y/y. Life insurance payout accounted for 10.18% of the total indemnities to policyholders during the period.
Middle East Life Insurance Company paid 411.9 billion rials ($1.46) in claims from 4,578 cases. Baran’s total payout amounted to 294.2 billion rials ($1.04 million), paid to 924 cases.
The total number of life insurance claims rose 2.07% to 550, 420 cases. Life insurance sector accounted for 1.98% of the total claims during the said period.
CII put the loss ratio of the sector at 32.9%. Loss ratio is used in the insurance industry to show the ratio of losses to premium.
Middle East Life Insurance Company had the lowest payout ratio at 21.4%.
Future Prospects
Growth in life insurance premium was apparently contrary to earlier expectations and doubts over the sustainability of life insurance premium during the pandemic. Households were reportedly less likely to be able to afford costly life insurance.
The sector’s potential for sustainable income and its relatively low payout ratio, has made life insurance companies appealing for investors.
New investors are supported by the CII. Promoting specialized insurance companies was one of the measures devised by the regulator to shift insurers' focus from auto and medical insurance to lucrative and innovative areas, especially life insurance that had not been popular in the recent past.
The CII has recently granted license to several new insurance companies, including life insurance firms. The regulator recently authorized two firms, Karizma Life Insurance and Hamerz Life Insurance. Isatis Life Insurance Company is also expected to join soon.
Life insurance penetration rate in Iran is 0.3%, which is much lower than the 4.2% and 3.3%, respectively, in advanced economies and average life insurance penetration in the world.
The parliament recently called on the industry to boost life insurance revenue to 50% of its total revenue by the end of the Sixth Five-Year Economic Development Plan (2016-21), which seems highly unlikely in the present economic conditions.
Market observers and experts say the insurance agents' lack of depth and familiarity with life insurance plus their inability to present it professionally to the public is impeding growth.
