What is the competitive position of Razi Insurance among private insurers in Iran?
Approximately 14 years ago, there were only four state-owned insurance companies in Iran. At that time, parliament passed a law allowing private insurance companies, and our shareholders were the first group to establish a private insurance company in 2002. Since then, we have issued around 12 million insurance policies and currently hold a 4% market share, insuring 2.5 million people. Since our establishment, some 25 other private insurers have been set up as well, but in most of these cases their shareholders are institutions related to the government. Currently, there are only two or three insurance companies in Iran that are 100% private, and Razi Insurance is one of them. Another difference is that our income does not come from the shareholders; 99.5% of our business comes from our customers. We are a general insurance company active in health, life, liability, engineering, projects, construction, and automobile insurance, where most of our policies are focused. However, we also insure numerous oil and gas projects, such as the Azadegan oil field, the largest oil field in Iran.
The Central Insurance of Iran is adapting some policies to modernize the insurance market, including separating the life and non-life business. How is Razi Insurance planning to adapt to these changes?
The Iranian insurance industry started 100 years ago, and 50 years ago the law on third-party liability (TPL) automobile insurance was passed. Over the last 50 years, TPL automobile insurance has been the most important segment of the insurance industry and still is, with 50% of the total premiums written in Iran. During these years, life insurance has not had that big of a share of the insurance business. However, it is a growing business, with a 7% share of all premiums written now. Its future growth will depend on how insurance companies can introduce new products. Another important factor would be if European insurers decide to enter the Iranian market. This will make the market grow up to 9%, but not to the level of countries like Japan. In this sense, if the regulator decides to separate life and non-life business, we are ready to divide our company into two to meet this requirement. This is a good idea because in most of the developed countries, life insurance companies are completely separate from non-life insurers. For the time being, general insurance companies can play in both life and non-life business.
Would you like to enter into a joint venture with a foreign insurance company to increase your share in the market?
This is a decision we are considering and we are negotiating with well-known foreign insurers. A joint venture would help Razi in many ways. Firstly, partnering with a strong company overseas will help to strengthen our brand. At the same time, it will give us more knowledge about the insurance industry in terms of processes, types of services, and new products. Finally, an international partnership will give us access to new technology. The insurance industry is currently very much related to IT, so getting the latest software could help us to sell new products and provide a better service. We are looking at some European insurance companies, a number of which are coming to Iran to study the market and hold discussions. We are in talks but we have not finalized anything yet.
Is it part of your strategy to expand across the region?
We are preparing a business plan for developing our regional expansion. We are looking at neighboring countries, such as Afghanistan and Iraq, as well as countries in the north, particularly the CIS countries. We want to establish branches in the region and are already talking to some of these countries, although their rules are different; in some of them we will be able to open a branch but in others you have to set up a new insurance company.
How do you see the future development of the insurance market in Iran?
Iran is an excellent market from the insurance point of view. There are many differences between Iran and other Middle Eastern countries; for example, in many Islamic countries conventional insurance is forbidden and only takaful insurance services can be issued. However, in Iran and Turkey, conventional insurance is not forbidden, and this is why we are the second-largest insurance industry in the MENA region. Moreover, Iran has a population of 80 million, being the second-largest country in the MENA region in terms of population and extension. Further, Iran has the second-largest gas reserves in the world and the third-largest oil reserves. In this regard, the insurance industry plays an important role in the oil and gas sector, and this is why we are going to play an even larger role going forward than in previous years.
What are your objectives for the year ahead?
We have a 10-year strategic plan that we review annually. One of our objectives is to grow our market share by 0.5% annually. In the first four years of our 10-year plan, we have achieved almost all of our objectives, and in some cases, we have even exceeded them. Therefore we hope to continue with this success; our goal for 2016 was to have a 3.5% market share, but we have achieved 4% already. Due to the increase in the number of private insurers in Iran and the decrease in the presence of the in the sector, we think that by 2022, whichever insurance company has 7% of market share will be the largest insurance company in Iran. This is our goal, to be the first insurance company in the country in terms of market share and number of premiums. For the time being, we are already number one in profitability. If we continue with the same progress, Razi Insurance will be the largest company in the Iranian insurance industry in 2022.