In Our Hands

Alborz Insurance has been in the market for 52 years, with a wide portfolio. What are the cornerstones of your activity?

Five or six years ago, insurance was mostly marine oriented, but now we insure more automobiles and motorcycles. In fact, about 50% of our portfolio is focused on automobiles and motorcycles. Switching to cars and motorcycles was not a decision we made, but instead it was due to market forces. Currently, automobile and motorcycle owners are obliged by law to obtain third-party liability insurance. In addition to that, the automotive market is growing at a rate of 1.5 million new cars every year. The main reason we have expanded our automobile portfolio is because auto production has increased dramatically over the past couple of years. Coupled with imports, we are starting to see a luxury market that has to be insured. When considering the size of the insurance market, more than 55% belongs to motorcycles and cars, with rates decreasing because of the tough competition in the market. Before privatization, there was no real competition; now we are witnessing a market undergoing expansion and we have to adjust to that trend. Every insurance company tries to maintain a balanced portfolio of risks, and Alborz Insurance has a historical advantage in marine and transportation insurance. Given that marine and travel insurance has been less popular over the past few years, our shares in the auto insurance market have increased accordingly. That is how we have managed the composition of our portfolio. While the market pushes us toward auto insurance and we attract more business from other sectors in order to maintain a more balanced portfolio. When it comes to marine insurance, the rates are going down because of competition, not volume. We offer premiums that have been decreasing due to the greater number of competitors in the market. Transportation insurance rates have lowered as a result of the global economic downturn as well.

What strategies are you putting in place to differentiate the company from its competitors?

We offer a variety of policies in life insurance. Some are designed for the event of death and others are more long term in maturity. Due to the inflation rate, buying life insurance is not convenient for consumers. If someone passes away, the amount of money left is rarely considerable. What the country as a whole is lacking due to laws and regulations is incentives; we cannot make life insurance more attractive to customers and it is difficult to make insurance in general alluring. Breaking down our markets, auto insurance comprises 42% of our business, health 20%, marine 5%, construction and engineering is 5%, and 10% of our portfolio is geared toward professional liability. About 6% of the company is dedicated to life insurance, and we are working to increase this figure—the future belongs to life insurance. The premiums raised by life insurance need to be invested in programs and assets that will generate an income to be paid off in the future. However, current laws and regulations do not allow us to do that in an economically meaningful manner.

What can be done on a legislative level to ease these laws?

As insurers, we would like to foster an insurance culture. People are not familiar with the insurance world. It is not my duty to educate them—it is the government’s role to improve the insurance environment and raise people’s awareness about insurance.

What projects are in the pipeline to make the company more competitive and profitable?

What distinguishes us is our service. We have been customer-oriented through the years to provide value-added services. We conduct a very rapid evaluation of claims and disperse payments quickly, which is highly attractive for our clients today. What we have done recently to increase our competitiveness is introduce new products, exclusive to Alborz. One is coverage for cancer treatment. Patients pay premiums for a few years and are covered for the rest of their lives. We have designed this product with a team of practitioners and doctors. The other Alborz product we have recently introduced to the market is coverage for newly married couples that are struggling to have a baby. After certain conditions are met, we pay for different treatments to help them have a child.

What do you expect from these two unique services you are bringing to the market?

These two products have been introduced fairly recently to the market, and what we intend to have is not only customers using these products but also contributing to brand association and recognition. We want to inject the market with innovative products because we are an avant-garde insurance company that goes against the grain of more conservative competitive enterprises. We are trying to project an image of ourselves, using these products as tools to create a fresh perception.

© The Business Year – October 2012