EghtesadOnline: The share of life insurance in the overall portfolio of the Iranian insurance industry is meager which has reduced the overall penetration rate of insurance cover in the country of 80 million people.
According to IBENA, the penetration rate of non-life insurance is close to the average rate in the world. Iran’s insurance penetration ratio now is 35th in the world.
Insurance penetration rate, which is measured as the ratio of premiums underwritten in a particular year to the GDP, in Iran stands at 2.3% which is 0.2% higher than in Central Asia and the Middle East insurance market.
However, the penetration rate in the advanced countries is 7.8% and the world average is 6.13%, according to Financial Tribune.
The insurance penetration rate for emergent markets is reported at 3.3% which is 1% above that of Iran.
This is while the life insurance penetration rate in Iran is 0.3% which is comparatively lower than the 4.2% and 3.3% respectively reported for advanced economies and average life insurance penetration in the world.
The penetration rate for life insurance in Central Asia and the Middle East is 0.5%, and the figure for emerging markets is 1.9%.
As per a report by the Plan and Budget Organization, with regard to life insurance penetration Iran was 5th in the region in fiscal 2017-18 (repeating the record for five consecutive years) and 52nd in the world.
The PBO reckons insurance overreliance on the capital market and incompatibility of life insurance with bank interest rates as well as lack of skilled agents for the life insurance sector as reasons behind low life insurance penetration in Iran.
According to a report by Fitch, the global ratings agency, in the fourth quarter of 2018, high inflation and low household incomes constrained the development of the life insurance segment, while the lack of access of insurers to foreign capital and expertise were other impediments to decent growth in the non-life insurance segment.