Middle East Life Insurance Company, affiliated with the privately-owned Middle East Bank, officially started operating on Monday as the first specialized Iranian insurance firm.
Speaking at the opening ceremony, Abdolnasser Hemmati, the head of Central Insurance of Iran, said the establishment of a life insurance firm is a turning point for the industry, as expansion of life insurance will guarantee a sustainable growth for Iran’s insurance market.
“General insurance firms should spin off their life insurance operations,” Hemmati was also quoted as saying by Middle East Bank’s website.
Middle East Life Insurance Company became operational with an initial capital of 1.2 trillion rials ($37.9 million), aiming to “promote life insurance among the public by offering innovative and attractive insurance products”.
Mohammad Ibrahim Amin, the former head of CII, will be the chairman of the board of directors at the company.
Last month, CII announced that a number of insurance firms have proposed spinning off their life insurance operations into separate entities. It was also announced earlier that the regulator will issue no new license for general firms.
Hemmati said life insurance category accounts for a considerable portion of insurers’ portfolio in other countries, which unfortunately has a meager share in the portfolios of Iranian insurers.
“The annual per capita premium in Iran stands at $100 at present. The annual average insurance spending per person is $14 for Iran’s life insurance category,” he said.
Life insurance category accounted for nearly 12% of insurers’ premiums during the nine months ending Nov. 20. Insurance firms generated 21.7 trillion rials ($525.9 million) by selling life policies during the eight months to Nov. 20, marking a 37.19% growth compared with the same period of last year.
However, Hemmati noted that the sector experienced a 38% growth in the number of sold life insurance policies during the nine months to Dec. 20.
CII has not yet published the insurance industry’s nine-month statistics.
Hemmati also called on Middle East Life Insurance Company’s directors to be cautious about their investments.
“Insurers’ investments could be the industry’s Achilles heel … You should not be moved by short-term trends in the market,” he said.
CII is also planning to boost the share of life insurance in the insurers’ portfolio. Separating the reserves is of high importance for promoting the category, as insurers are expected to meet their long-term commitments.