"Insurers sold more than 32 million policies during the period while 320 trillion rials ($1.06) was paid in claims," the state broadcaster IRIB quoted Gholamreza Soleimani as saying at the 28th Conference on Insurance and Development Saturday in Tehran.
Even though the loss ratio of the insurance industry has declined significantly in the past decade, the combined ratio still is 100%, said the official.
According to Soleimani, the loss ratio of the medical insurance segment increased from 80% last year to 96% now, "mostly due to the higher medical costs and medicine price.”
The loss ratio of third-party auto insurance was 116% for commercial vehicles and 110% for passenger cars, he said.
The latter two categories are the main source of insurance companies' premium income, with third-party auto insurance accounting for one-third of the premium.
Loss ratio and combined ratio are used to determine the profitability of an insurance company. The loss ratio measures total incurred losses in relation to the total collected insurance premium, while combined ratio measures the incurred losses and expenses in relation to the total collected premium.
A combined ratio below 100% indicates that the company is making underwriting profit, while above 100% means that it is paying out more money in claims that it is receiving from premium.
The CII boss added that the insurance sector has collectively invested 1,500 trillion rials ($5 billion) in other markets. He did not provide details.
Unlike banks, insurance companies can invest in other markets, such as stocks and property. The CII, as the regulatory body of the sector, has been encouraging insurers to make informed investments to improve the sustainability of their revenues, especially in the life insurance sector.
Soleimani noted that the digitization of processes is still on the CII agenda. "The issuance of all policies, including medical and life insurance, will be digitalized by the end of the current fiscal year in March 2022.”
The process of digitizing insurance procedures began in May 2020 when the CII ordered companies to switch personal auto policies to electronic format.
Insurance companies were required to transfer the process of sale, renewal, and issuance loss payments of personal auto policies to an online platform.