The Iranian government has approved measures to reduce taxes on the insurance sector via exempting insurers from value added tax (VAT), according to Economy Minister Ali Tayyebnia.
The government has approved and sent a Bill in this regard to the Parliament, he said at the annual general meeting in early August of the insurance regulator Central Insurance of Iran (CII).
He added that, if approved, the enactment of the Bill will help toward better insurance services, reported Financial Tribune.
In April, Dr Abdolnaser Hemmati, CII President, had said that insurance premiums would be reduced by 9% if the tax exemption proposal was approved.
At the CII annual general meeting, he also presented a report on the performance of insurance sector for the last Iranian year ended 20 March 2017 and for recent months.
“In the previous fiscal year, insurance premiums grew by 22.5% and for the first four months of the current year (ended July 22), its growth rate was about 18%,” Dr Hemmati said. Total premiums reached IRR277.2 trillion (US$8.4 billion) in FY2017.
“If this trend were to continue, the insurance penetration rate – the ratio of premium to GDP – will surpass the 2.2% achieved in the previous fiscal year,” Dr Hemmati added.
He noted the gradual decrease in the loss ratio as a sign of the improving financial conditions of insurers, announcing that the ratio declined to 78% last year from 89% four years ago.
“Unfortunately, accidents caused many deaths and financial losses last year in the country,” he said, adding that a 50% rise in fire insurance premiums is because of Iranians’ greater awareness of these accidents.
The massive blaze at Plasco, a high-rise building in Teheran last year, which claimed the lives of many firemen and civilians, has been one of the main factors increasing public awareness of insurance.
He also cited the strengthening of Iranian insurers, expansion of insurance and reinsurance ties with credible foreign companies, especially European ones, deepening financial oversight, division of life and non-life insurance categories and promotion of an insurance culture as important ongoing tasks of CII. M
IRR1,000 = US$0.03