Struggling Insures Seek Gov’t Help

EghtesadOnline: Iranian Insurers’ Syndicate has asked the Ministry of Economy for financial aid to the industry burdened by the impact of the coronavirus spread.

News ID: ۷۴۹۹۱۹

28 April 2020

According to financial tribune,

Mohammad Karimi, the IIS secretary general in a letter to the minister, called for the government's support to prevent the collapse of the network, the IIS public relations office said.

Insurance agents, brokers, and loss assessors have suspended their work since the outbreak of the virus in Iran in February. The suspension came after the Central Insurance company of Iran (the industry regulator) compelled all insurance firms to conduct their business online.

According to Karimi, an estimated 400,000 people are involved in selling insurance policy, directly or otherwise.

As per a directive issued by the CII in March, insurance firms are required to provide policyholders the option to renew their compulsory auto policy via the insurance companies' websites. If not, insurance policies would be renewed automatically for three months.

Insurers came up with new measures to ease the sale of auto insurance policies to reduce personal interaction between the insurer and the insured.

A new section was seen on insurers' websites allowing the purchase of insurance policy from home.

Iran has confirmed more than 91,472 cases of people infected with the infectious disease, with 5,806 deaths by Monday noon.

Appeal by Authorities

Las week Iran had eased the lockdown following a decrease in confirmed infection cases and deaths. However, health authorities have pleaded with the people to stay at home until the deadly disease is eliminated and conditions improve.

Last week the Central Bank of Iran announced that the government's 10-million-rial ($62) was paid to nearly 17 million heads of households in need by Tuesday -- part of a scheme to help low-income families partly deal with the economic impact of the Covid-19 pandemic.

An estimated 520 trillion rials ($3.22 billion) is to be allocated to 10 jobs most affected by the contagion that has put to waste most economies big and small.

Impact of the disease is not limited to the sales network. The virus outbreak was reported weeks before Nowrouz, the Persian New Year and annual holiday season.

It could not come at a worse time. The outbreak resulted in a sharp decline in Iran's inbound tourism and subsequently the insurers' annual balance sheets, especially the auto insurance and travel insurance categories.

Transportation insurance category was also hit by the coronavirus spread largely due to the closure of borders and restrictions on businesses across the board.

Health Concerns

Medical insurance is expecting a huge increase in payouts. Policyholders are understandably more concerned about their health that by extension demands a wide range of medical services.

Besides, some insurers, such as Saman Insurance and Iran Insurance Company, have extended their medical policies to cover covid costs that certainly will hurt their profit.

Moreover, market observers expect a decline in life insurance premiums, due to the wide-spread financial difficulties that come with pandemics.

According to a recent poll, the virus has reduced the income of more than half the working population.

At least 600,000 people who lost their jobs, mostly in the services sector, filed for unemployment benefits in the past three weeks.

How and when the virus will be eliminated is impossible to tell. What can be said with certainty is that if the slowdown and lockdowns continue for long more businesses will shutter and file for bankruptcy. The dole queues will get bigger creating new problems for the government.