The Central Insurance company of Iran is planning to gradually separate the life insurance sector from non-life policy in a bid to improve efficiency and the services it offers.
Abdolnasser Hemmati, CII head said the move was essential for promoting professionalism in the insurance industry.
“By doing so, insurers will be able to increase their presence by enhancing [their performance in] the life category,” he was quoted as saying by the CII website at the inauguration ceremony of the Ninth Exchange, Banking and Insurance Exhibition (FINEX 2016) Sunday in Tehran.
Personal auto policies account for the largest portion of Iranian insurance firms while life insurance penetration rates is said to be barely 6%-7%.
Policymakers are now trying to lift the share of life insurance category in the insurers’ portfolio, which could be the next big thing for the industry.
Hemmati also noted that the insurance industry accounts for almost a third of value added in developed countries while “Iranian insurers’ share in the financial markets is 6%.”
“We can help ease the pressures on the banking sector in financing businesses by increasing the share of capital markets and insurance industry,” he added.
Iran could also elevate its potential in reinsurance in the post-sanctions era, “after being rated by international companies and accepting risks from countries in the region.”
CII is focusing on foreign partnerships, said the chief insurer. “Domestic companies also have been holding talks with foreigners since the lifting of the sanctions in January and some foreign firms have shown interest in partnering with Iranian companies or opening their branches in the country.”
As per law, foreigners’ are permitted to own up to 49% of domestic insurance firms. However, there is no limit for purchasing shares in the free trade zones and foreign investors can hold 100% stake in offshore insurance companies.
Training Staff
The chief insurer noted that the regulator is also seeking to promote corporate governance in insurance firms. “The CII will require insurers to follow standards about transparency, governance structure, auditing and risk management.”
The CII will also continue to train insurance company staff, according to Hemmati. “We are far behind (international) standards in this regard.”
According to data, the insurance industry’s earnings from premiums totaled 226 trillion rials ($6.5 billion) in the previous fiscal year that ended in March, up 6% from a year earlier.
A recent publication of the Iran Insurers Syndicate indicates bank-affiliated insurance firms have managed to increase sale of life insurance policies. The Iran Moein Insurance firm, a subsidiary of Iran Insurance Company operating in the free trade zones, boasts the largest share of life insurance in its portfolio, at 60% and more than any other company.
