Iran’s Insurance Regulator vs. InsurTech: Citizens Are the Biggest Losers in a System Resistant to Innovation

Regulatory bodies in Iran often take an unconventional path. What should ideally foster innovation and provide a supportive environment has, over time, evolved into a restrictive tool that hinders the startup ecosystem. This major challenge in the InsurTech sector not only jeopardizes the future of Iran’s insurance industry but also inflicts significant losses on users and citizens.

Over the past two decades, startups have dramatically transformed lifestyles, with the insurance industry being one of the prime examples of this change. InsurTech - or insurance technology - offers users insurance services beyond traditional constraints of time and location. For instance, tasks like renewing car insurance, which once demanded considerable time and effort, can now be completed effortlessly through mobile devices.

In Iran, InsurTech startups and platforms have emerged over recent years, simplifying processes for users. Today, citizens can submit their requests from home or work and receive their desired insurance coverage by the end of the day. The process has been streamlined to this degree.

Competition Benefits Users

Buy Now Pay Later (BNPL) services have gained immense traction in Iran due to its complex economic landscape. Searching for “instalment insurance” on Google reveals prominent names such as Azki, Bimeh Bazar, Bimeh.com, and even Snapp-Bimeh.

These platforms enable users to purchase needed services by paying a portion upfront and deferring the remaining payments. Insurance providers now offer installment options that allow customers to access coverage beyond their immediate financial capacity.

Digitization Lowers Costs and Streamlines Processes

One persistent issue in utilizing insurance has been lengthy claim settlement procedures. Filing claims, evaluations, and reimbursements typically require about three days, which many policyholders struggle to follow up on due to daily commitments. Platforms like Azki now facilitate online claims processing.

This digitization significantly reduces claim settlement times while enhancing transparency and minimizing fraud risks. It also eliminates secondary costs like transportation expenses. Furthermore, digital advancements pave the way for artificial intelligence integration into these processes.

Artificial Intelligence (AI) has become a revolutionary tool infiltrating various sectors globally, and InsurTech is no exception. According to a survey by InsurTech company RDT, 85% of insurers believe AI and machine learning will transform claim processing within five years. Key benefits include faster case handling, substantial cost savings, and improved fraud detection capabilities.

While these innovations simplify routines for users through creative tech-driven solutions, they face significant resistance in Iran’s regulatory landscape.

Regulatory Tensions Disrupt Access to Services

The ultimate losers of lagging innovation are Iranian citizens themselves. Startups emerge as responses to societal needs; they are natural products of their technological era. However, innovation in Iran encounters resistance from regulatory authorities, a challenge not limited to InsurTech alone.

In 2023 (Iranian calendar year 1402), Digiato uncovered correspondence urging insurance companies’ executives to integrate with the central insurance switch system. Previously, startups had attempted legal challenges against this mandate; however, Iran’s Competition Council dismissed their objections and ruled that the central switch system was not monopolistic.

Without issuing an official statement, Iran’s Central Insurance Organization cut off online insurers’ access to inquiry services on September 1st (Iranian calendar year 1403).

Despite hopes for improved relations under new leadership at Central Insurance Organization, tensions persisted into subsequent years. In July 2024 (Iranian calendar year 1404), CEOs of three InsurTech companies -Azki, Bimeh.com, and Bimeh Bazar - submitted formal letters to government ministers expressing concerns over restrictive measures imposed by Central Insurance Organization.

Around this time, iTool separately wrote to Central Insurance Organization’s director emphasizing healthy competition and innovation support.

These ongoing disputes between InsurTech innovators and regulatory entities hinder natural technological progress while depriving Iranian users of accessible, affordable services. Instead of fostering fair competition policies aimed at advancement, restrictive approaches maintain outdated systems, ultimately stalling national economic potential rooted in digital transformation.