Insurance Industry Struggling to Survive

EghtesadOnline: Iran Insurance Research Center has reviewed the impact of covid-19 spread on the key industry, projecting a decline of 15.07% in premiums in the first quarter (March 21-June 1) of the current fiscal year.

News ID: ۷۴۹۹۸۶

06 May 2020

IRC predicts higher risks in medical and life insurance categories, as the vicious disease has led to an increase in medical costs of policyholders.

Families are also less likely to be able to afford life insurance on a regular basis, which could add to the insurers’ pains in the near future.

While the industry is expected to see financial hardships in the medical and life insurance categories, the payout in other categories is expected to decrease.

Auto insurance, for example, has registered 80% annual decline in payouts in the Persian New Year holiday season, which helped insurers to add to their not so healthy income.

The category almost always is at the top of the list of payouts.

Restrictions by the government have indirectly impacted insurers' businesses and their income in the fire, travel, transportation and accident categories.

However, the decline in income in the abovementioned categories could be compensated considering the lower risks in business activities.

The research puts a strong emphasis on the need for development of intelligent platforms, employing innovation and use of big data by insurers, mainly to minimize short-term effects of the pandemic and prevent losses in similar conditions in future.

The sector is facing a huge problems when it comes to human resources, especially those working in sales network, namely agents and brokers.

Seeking Help

Earlier in April, Iranian Insurers’ Syndicate asked the Ministry of Economy for financial aid to the industry burdened by the impact of the deadly disease.

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

According to Mohammad Karimi, the secretary general of Iran Insurers Syndicate, an estimated 400,000 people are involved in selling insurance policy, directly or otherwise.

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

Iran has confirmed more than 99,970 cases of people infected with the infectious disease, with 6,340 deaths by Tuesday.

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 and have 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 face bankruptcy.

The dole queues will get longer creating new problems for the government struggling to save lives and restart the economy ravaged by the covid, as is the case in almost every country in the world.