TEHRAN – Iran’s economy minister warned that the country’s insurance industry lacks a coherent long-term investment strategy and must redirect capital toward export-oriented and foreign-currency-earning sectors to strengthen its economic role.

Speaking at the National Conference on Insurance and Development in Tehran, Economy Minister Seyed Ali Madanizadeh said the government is restructuring the sector to prevent future balance-sheet strains similar to those seen in the banking system.

He noted that insufficient supervision and weak digital infrastructure could expose insurers to risks that would spill over into the wider economy.

Madanizadeh cited the industry’s low insurance penetration rate of 2.4 percent, far below the global average of more than seven percent, as evidence of an underdeveloped market with limited economic impact.

He said raising penetration—particularly through expanding health and complementary medical coverage—would help distribute risk more efficiently and reduce out-of-pocket payments, thereby supporting household financial stability and overall economic activity.

He argued that precise investment planning is essential for insurers, given their role as long-term institutional investors, and said his ministry is finalizing a new investment framework for insurance entities. The minister also disclosed that 150 projects had recently been issued to affiliated economic bodies, including initiatives to modernize insurance regulations.

Insurance penetration rate should rise to 7

At the same event, First Vice President Mohammad Reza Aref emphasized that insurance penetration is a key metric for assessing national economic development, likening it to telecom penetration rates that once drove sectoral growth.

He said inconsistent national statistics on insurance penetration—ranging from 1.9 percent in 2022 to 2.4 percent in 2023—complicate macroeconomic planning and called for a unified national data system.

Aref underlined that the insurance industry functions as the third pillar of Iran’s financial system after banking and capital markets, with nearly 250,000 employees and agents.

He said increasing penetration to the development-plan target of around seven percent would expand risk-sharing, support businesses, and enhance economic resilience.

The 32nd National Insurance and 13th International Insurance and Development Conference (ICID 2025) was held on Tuesday, December 2, 2025, at Tehran’s Milad Tower Conference Center under the slogan “Rethinking supervision; rebuilding trust.”

EF/MA