Transport Insurance Grows
EghtesadOnline: Insurance companies' income from transportation industry saw considerable growth in the last decade despite the challenges and restrictions faced by businesses.
The Central Insurance company of Iran said insurers generated 10.2 trillion rials ($37 million) from the transport segment in the last fiscal year (ended March 2021), posting 79.5% growth compared to the year before. The category accounted for 1.26% of the industry's premium income.
The category's total premium was 880 billion rials ($3.2 million) ten years ago. Payout ratio in this segment was 21.54%, 14 percentage points less than the year before. Transport insurance was among categories with the lowest payout ratio making it profitable for insurance companies.
Insurance companies generated 817.3 trillion rials ($3.4 billion) in premium in the last fiscal year up 37.8% on the year before.
Third-party vehicle insurance still tops the list alone generating one-third of the income.
Insurance companies total payout reached 436.7 trillion rials ($1.83b) during the year, up 30% compared with the year before. Third party vehicle insurance, which is obligatory in Iran, accounted for 40% of the total payout at 175.2 trillion rials ($736m), up 27.7%.
According to Risknews, imported cargo accounted for 85% of insurers' premium income from transport insurance.
Asia Insurance Company accounted for one-third of the premium from transport insurance last year. Other privatized firms, Dana and Alborz, and bank-affiliated insurance companies, such as Novin Insurance, Saman Insurance and Parsian Insurance, rank after.
This is while, bank-affiliated insurance companies are often censured for disrupting competition in the key sector by compelling customers to deal such companies.
Insurance industry policymakers have employed a number of measures to help promote the sector such as lowering rates, which is reportedly more expensive than the premium rates offered by their foreign peers.
Insurance authorities approved regulations according to which importers of goods are obliged to insure their cargo. Some officials say obliging people to cover risks is the only and fastest way to promote the insurance industry.
However, market analysts and insurance firms believe that the sectors’ growth is related to forex income, imports and macroeconomic policies.
Iran’s foreign non-oil trade stood at 145.7 million tons worth $73 billion in the last fiscal year. According to the Islamic Republic of Iran Customs Administration, exports reached 112 million tons worth $34.5 billion while 34.4 million tons of goods were imported worth $38.5 billion last year.
In the same period imports plunged 11.7% in value and 5.8% in volume. Exports also declined 14% and 15%, respectively, in value and volume.