Increase in their annual income was lower than the year before. However, the report includes some interesting numbers that make the pandemic-hit sector hopeful about the future.
For instance, 29 companies collectively generated 591 trillion rials from selling insurance policies. The regulator had earlier predicted that insurers’ earnings from insurance policy would reach a record 600 trillion rials ($3.8 billion) by the end of the current calendar year that ended in March.
Almost one-third of insurance revenue comes from the mandatory auto insurance category. Generating 204 trillion rials ($1.3 billion), the category recorded annual growth of 39.7% as more households are owning cars than before.
The medical insurance category made the second largest contribution to premium income with 135 trillion rials or 22% of the total. CII data also indicates that medical insurance category premium were 29% higher than the year before.
Life Insurance
Meanwhile, life insurance share in total income reached an all-time high of 14.67% in the said period. Premiums from the gradually expanding category amounted to 86 trillion rials -- up 37.35% compared to a year ago.
Over the years the insurance sector has been striving to come up with effective measures to boost the role and significance of life insurance in companies' portfolio by at least 50% in the total generated premiums -- a tall order but nevertheless achievable, experts say.
It is said that the revenue from life insurance could help strengthen the financial standing of companies because regulations allow insurers to invest the money into other markets.
The CII is also promoting the idea of setting up specialized insurance firms. In April, Baran Life Insurance Company was granted a license to become the second specialized life insurance company in the domestic market. First is the Middle East Life Insurance Company, affiliated to the Middle East Bank that made its debut in 2017.
Payouts
Insurers paid 33.2 trillion rials in claims during the year, which was 18.18% higher compared to the year before. Personal auto insurance tops the list of insurance categories in terms of share of total claims, solely accounting for 40% of payouts.
Medical insurance is next with 30% share, followed by life insurance, which accounted for 7% of total claims.
However, figures related to the payout ratio seem promising. Personal auto policies and medical insurance categories recorded significantly lower payout ratios. Payout ratio in the personal auto category was 67.35% in the fiscal year to March, whereas the same ratio was 114% the year before.
Medical insurance payout ratio was 73.94% -- much lower compared to the 99% one year ago.
According to the CII report, the payout ratio in sum was 56.2% in March 2019-20, the lowest in the past five years.
State-Owned Co Shrinks
Dominance of the sole state-owned player in the insurance market had been a challenge for insurers in recent years. Iran Insurance Company's largesse in offering discounts on premiums and paying claims, was always seen as an unfair advantage by private insurers.
The recent report, however, reveals that the IIC share in the market declined to 31% in the last Iranian year. The share was near 35% in March 2018-19. This is while the company has announced that it plans to increase its market share to 50%. How it intends to do that is now known.
Asia Insurance and Dana Insurance Company, both privatized, follow the IIC in terms of annual income with 10.5% and 8% share of the market, respectively.
The new ranking of private insurance companies has a new entry this year. Dey Insurance, affiliated to Dey Bank, has managed to become the fourth largest insurance company in terms of generated premiums, after overcoming serious financial hurdles in the past few years.
All the facts and figures come amid the serious impact of the Covid-19 pandemic on the insurance sector and the general business climate. Iran Insurance Research Center has reviewed the impact of the deadly virus 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.
It also predicts higher risks in medical and life insurance categories because the vicious disease has led to an increase in medical costs as more people fall victim to the disease that has filled hospitals and cemeteries at terrible speed.
The IIRC offers insurers a list of measures which could help them get over hardships including embracing modern technology and innovation -- two important features insurance companies lack.