EghtesadOnline: The Central Insurance company of Iran (CII), the regulatory body of the industry, has added four names to the blacklist of unauthorized applications selling insurance policies.
CII's website said Irancell, Top, Set and Pot Life are banned from selling insurance as they had not received a license from the regulator.
The CII has banned insurance companies, brokers, branches and agents from dealing with blacklisted applications, stressing that unruly insurers face the full force of the law if they continue selling insurance via such apps.
In a similar case last year, the CII banned seven insurance companies from selling third-party auto insurance for failing to meet CII demands to cut ties with the illegal applications.
Third-party auto insurance is mandatory in Iran and car owners lacking the policy are penalized. This category accounted for the largest share of premium with nearly one-third (34.8%) of the total income in 11 months to Feb 19.
The High Council of Insurance earlier ordered companies to acquire official permit from the CII for online business. It announced a framework for regulating the activities of online insurance agents according to which an “Official Online Broker License" allows them to operate on behalf of insurance companies, offer price comparisons and undertake online transactions.
In recent years hundreds of startups and knowledge-based companies have opened in Iran with some offering insurance services. These firms account for 96% of the total online sales. They are recognized as knowledge-based firms by the government and have an estimated 5 trillion rials in investment.
The regulator has announced that it wants startups to handle 10% of the domestic insurance market. However, newcomers' presence is not appealing to traditional insurers. Online insurers, even those with permits, have been blamed of underselling and disrupting the market.
Earlier in April, the CII notified Azki, Bimeh Bazar, iToll and Bimeh.com to remove disallow special discount offers from their websites or face legal consequences.
Insurers can offer up to 2.5% discount but policies are being offered at considerably lower rates via some applications and websites. Underselling third-party auto policies, which in Iran pays for damage or injury to third parties, recently disrupted the insurance sector prompting strong protestations from companies unable or unwilling to keep up with the unfair competition.
The CII's measures are seen as contradictory by some market observers as online insurance firms are expected to rely on their competitive advantage, namely the ability to use technology, focus on policyholders' needs and cut costs.
Decision makers have often voiced support for innovative businesses and tech-based solutions. However, in practice they create hurdles and impose bans on online businesses that are preferred by the people.
High and rising car prices have pushed up mandatory auto insurance policy prices to levels beyond the ability of many car owners. Offering discounts seems to be a wise move by the new players helping them to increase their clients and income.