TBY talks to Seyed Mohammad Karimi, President of Bimeh Markazi Iran, on growing the insurance sector and working with foreign investors.
THE BUSINESS YEAR How would you assess the achievements of the Five-Year Development Plan, and has it changed the landscape of the insurance industry?
SEYED MOHAMMAD KARIMI Stable countries generally maintain programs for the insurance industry that have a good outlook for the future. Having been stable, Iran also has not only a Five-Year Development Plan, but also a 20-Year Outlook, both approved by our Great Leader, the Iranian Parliament, and the cabinet. Accordingly, the Five-Year Development Plan has been devised and, currently speaking, we are implementing Phase 5. So far, we have carried out many programs through this platform in order to develop the industry, and the performance of the insurance market has been fine. Our targets in the insurance sector have been achieved, and now we are shifting our focus to long-term goals. Under the guidelines of the Development Plan agenda, we have launched a new approach to the insurance sector that will make the market more competitive and increase the insurance penetration rate. In addition, through the Development Plan, we are investigating strategies that will support the expansion of the sector and promote the regulatory and supervisory position of Bimeh Markazi.
How is Bimeh Markazi expanding the Iranian insurance market by encouraging private sector participation?
The Iranian insurance industry dates back more than 80 years. As for the Iranian civilization, that goes back 4,000 years ago. There have always been traces of insurance in our culture, which is why I firmly believe that our people have been accustomed to different types of insurance. As far as religious jurisprudence is concerned, insurance was backed by our Great Leader, Ayatollah Khomeini, and until recently it has been completely dominated by the government. However, according to the Constitution of the Islamic Republic of Iran, our country has launched a program that contributes to the privatization of many companies in the realm of the insurance industry. At present, a growing number of private players are involved in the insurance market. Insurance is a religious and legal contract that has its basis in ethics. As the regulator of the Iranian insurance market, we issue licenses and facilitate the entrance of private insurance companies into the market. There are now 25 insurance companies in Iran, and only one of them is owned by the government—the rest are non-governmental.
How is Bimeh Markazi acting in order to increase insurance penetration rates?
The whole market is worth approximately $10 billion. However, there are challenges that deprive people from enjoying the insurance market to its full extent. In that sense, our aim is to open up the market to allow Iranians to benefit from insurance products for the purpose of appreciating the value of their lives and belongings. We are primarily focusing on life assurance and we intend to expand it to a greater extent. Bimeh Markazi is implementing strategies in order to enhance consumers’ interest in life assurance. As an example, we are in the process of developing annuity, disability insurance, housewives’ annuity, as well as insurance for artists, musicians, and national heroes, in addition to other segments that can be covered by life assurance policies. We also attempt to enhance public awareness to persuade Iranians to benefit from insurance and guarantee and secure their future. Considering our strategy, life assurance is of prime importance and our staff and team is carefully exploring the trends of life insurance in foreign markets in order to demonstrate how our people can take care of their health and wealth. Currently, various classes of insurance are growing rapidly, including life assurance, household annuity, and disability insurance. As for non-life insurance, we have made considerable efforts concerning factory workers’ risks, the development of rural areas, land vehicle transportation, industry, and mining. We invest in financial services as well, which paves the way to increase penetration rates and the further expansion of the ever-increasing market. So far in 2012, the insurance market has grown by 45% in terms of total insurance portfolios, with a 100% increase in the first quarter of 2012 compared to the same period in 2011.
The Ministry of Petroleum, the Ministry of Industries and Mines, and Bimeh Markazi have announced that they will insure oil tankers traveling from abroad to Iran. What benefits will this bring to the country?
Insurance is the messenger of peace. The challenges we are facing have a negative impact on the economy, especially if there is a spillover to insurance companies. As an insurance entity, it is typical to rely on other insurance and reinsurance companies around the world. The international relationship between insurance companies is at risk at the moment, but we are strong and peaceful and continue cooperating with our neighbors and fellow companies. That is why we are insuring oil tankers. Holding such capacity, we welcome any insurance company throughout the world to establish joint cooperation with us. International entities show ever-increasing interest in our market. We have resolved all insurance-related problems internally, and now Bimeh Markazi is able to cover international activities.
This interview will be published in 'The Business Year: Iran 2013'. To pre-subscribe please e-mail us at info@thebusinessyear.com
© The Business Year - September 2012