Insurance companies reported 50% growth in the life insurance segment in the first eight months of the current fiscal year (started March 2021).
The Central Insurance company of Iran, the regulatory body of the industry, said 34 insurance and life insurance companies collectively generated 109.2 trillion rials ($364 million) from life insurance policies.
Despite the progress, the life insurance segment still has a meager contribution to total premium income accounting for 15.7% of the key sector's portfolio.
The parliament has called on the industry to raise the bar and boost life insurance revenue to 50% of the total revenue by the end of the Sixth Five-Year Economic Development Plan (2016-21), which seems highly unlikely in the present economic conditions.
A total of 5.01 million life insurance policies were sold in the said period -- 8.57% higher on same time last year.
Growth in life insurance premium apparently turned out to be contrary to earlier expectations and reservations about the sustainability of life insurance premium during the brutal pandemic. Households were reportedly less likely to be able to afford costly life insurance.
Insurance companies paid 35.7 trillion rials ($119 million) in life insurance claims, up 41.2% year-on-year. The amount went to 640,999 cases during the eight-month period.
The loss ratio of the life insurance sector was 32.68% in the said period, 2.21 percentage points lower than the first eight months of the previous year.
The sector’s potential for growth and its relatively low payout ratio, has made life insurance companies appealing for investors.
Currently two specialized life insurance companies are operating in the Iranian market, namely Middle East Life Insurance and Baran Life Insurance.
The CII recently granted license to several new insurance companies, including life insurance firms. It also authorized two firms, Karizma Life Insurance and Hamerz Life Insurance to start operations. Isatis Life Insurance Company is expected to join soon.
The CII has also reported further increase in the number of agents specializing in life insurance by 12.9% reaching 44,300.
CII data show Pasargad Insurance Company accounted for 71% of life insurance agents during the period under review.
However, market observers and experts say the insurance agents' lack of depth and familiarity with the need and significance of having a life insurance policy plus their lack of professionalism has impeded growth.
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.
