The Business Year talks to Dr.
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
The Central Insurance of
Iran is adapting some policies to modernize the insurance market, including
separating 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
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
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.
Razi Insurance was the
first private insurance company, established in 2002.
Holds 4% of the market, insuring
2.5 million people
- Date: 9/21/2016