The policy sector in Algeria has grown more than quintuple since the 1990s, but it placid remains small proportional to the size of the economy. The market is characterised by low penetration and concentration of coverage, and is dominated by non-life coverage, representing some 93 % of premiums, with automotive coverage alone accounting for half the sector ’ randomness revenues. however, the life section has grown quickly since being partitioned from the non-life segment in 2011. Product diversification and intense contest are besides driving growth in newfangled niches areas like agrarian indemnity, bancassurance and aid coverage. Better efforts to raise public awareness as to the advantages of insurance coverage, coupled with expanding networks of sales channels, can help the diligence navigate the expect risks and challenges precipitated by the drop in oil prices and submit spend .

Market Landscape

Algeria ’ s indemnity market includes 24 companies, according to the industry group National Insurance Council ( Conseil National des Assurances, CNA ). Since a legal change in 2011, general insurers have been divided into their life sentence and non-life components, with the non-life segment accounting for some 93 % of the insurance sector ’ south AD125.5bn ( €1.2bn ) in entire premiums in 2014, driven primarily by ample volumes in the car and industrial lines, at 52 % and 34 % of global sector premiums, respectively .
A total of 13 firms compete in the non-life segment, led by three state-owned insurers : Société Nationale des Assurances ( SAA ), with 21.2 % market parcel in 2014 ; Compagnie Algérienne des Assurances ( CAAT ), with 16.1 % ; and Compagnie Algérienne five hundred ’ Assurance et de Réassurance ( CAAR ), with 12.8 %, according to figures from the Ministry of Finance. privately owned firms lagged further behind, led by Compagnie Internationale five hundred ’ Assurances et Réassurance ( CIAR ), with 7.1 % market share ; and Alliance Assurances with 3.5 %. Two common insurers besides have operations in the non-life segment : Caisse Nationale de Mutualité Agricole ( CNMA ) and Mutuelle Assurance Algérienne des Travailleurs de l ’ Education et de la Culture .
In the life segment, seven competitors generated sum revenues of AD8.5bn ( €78.2m ) in 2014, or 6.8 % of the full policy market. Most of these were life-focused subsidiaries created by prove insurers around 2011, when a five-year seemliness period expired and general risk firms were no long permitted to offer life sentence policy products. These include privately held Cardif ( a subordinate of savings bank BNP Paribas El Djazair ), CIAR subordinate Macir Vie, and Axa Vie, one of two local affiliates of the french policy elephantine Axa. Public insurers besides operate subsidiaries in the life section, including CAAR ’ south CAARAMA, CAAT ’ sulfur Taamine Life Algérie, and SAA ’ s Amana. CNMA maintains a reciprocal life consort, Le Mutualiste. In February 2015, Compagnie d ’ Assurance des Hydrocarbures, the insurance affiliate of submit vegetable oil manufacturer Sonatrach, partnered with government-owned Banque Nationale D ’ Algerie bank and Kuwait ’ s Gulf Insurance Company to create Algerian Gulf Life Insurance Company ( AGLIC ), the industry ’ s newest entrant.

Niche Players

Two specialist firms besides operate in significant niches : Compagnie Algérienne five hundred ’ Assurance de Garantie des Exportations provides credit indemnity and Société de Garantie de Crédit Immobilier offers mortgage indemnity. A state-backed reinsurer, Compagnie Centrale de Ré assurance ( CCR ), is active internationally and has besides seen a major growth in domestic business since the act of a 2010 regulation obliging home insurers to reinsure at least 50 % of their portfolios through CCR. With AGLIC ’ s entry, the marketplace now counts 11 insurers with majority-state possession, 10 private firms and three mutuals. private firms were beginning authorised in 1995, and have been increasing their grocery store contribution since that time. In 2014, the public-sector firms accounted for slenderly more than 62 % parcel of the sum insurance market .

Oversight & Regulation

The finance ministry ’ second Insurance Supervision Commission ( Commission de Supervision des Assurances, CSA ) has overseen the policy sector since its creation in 2008, and has responsibility for authorising insurers, reinsurers and brokers. It consults with the CNA in developing regulations .
In 2015, sector operators called for reforms to requirements for opening agencies and restrictions on bancassurance policies. Alliance Assurances CEO Hassen Khelifati has called for regulations to be relaxed to allow notaries, travel agents or real estate of the realm agents to sell sealed types of insurance. Others proposed that more types of coverage – including on transport, transport and structure – be made obligatory, adding to existing obligations for natural calamity coverage on property, liability coverage on food producers and other basic protections. But Chérif Benhabiles, director-general of CNMA, said that obstacles to the sector ’ randomness emergence do not lie with regulation, “ The regulative obstacles have been removed. The problem now is a miss of vision in management. It ’ s not the state of matter ’ s speculate to build the sector. They are there to protect the consumer. We need to do our jobs. ”
As public budgets began to show the effects in 2015 of the sharp drop in oil prices, finance minister Abderrahmane Benkhelfa called for insurers to invest more of their earnings in growing the home economy. already, among a serial of solvency safeguards introduced since the sector was opened to individual operators two decades ago, insurers are compelled by jurisprudence to hold 50 % of reserve funds in Treasury bills .

Sector Growth

The industry ’ randomness 2014 revenues represented a 9.7 % increase from 2013, according to CNA figures, a dip from the 12.9 % year-on-year ( y-o-y ) growth reported the previous year. The beginning half of 2015 witnessed an increase in premiums of 6.5 % as compared to the same period in 2014, helped by strong gains in department of agriculture ( 16.4 % ), credit ( 11.2 % ) and liveliness ( 30.4 % ) premiums, according to preliminary CNA figures. Auto premiums showed a modest 2.7 % y-o-y increase, maintaining their claim to slightly more than half of sector-wide insurance revenues. Transport premiums skid 14.3 % compared to the lapp period in 2014 .
A follow-up of diligence profits in the local press, citing finance ministry sources, listed SAA as the sector ’ s biggest earner in 2014, with over AD3bn ( €27.6m ) in gains, followed far behind by mate state-owned firms CAAT and CAAR. CIAR and Alliance reportedly led the individual sector insurers, with profits totalling approximately one tenth of diligence drawing card SAA. Industry-wide profits were reported to come in at closely AD12bn ( €110.4m ) for 2014 .
“ We were an AD19.5bn ( €179.4m ) industry in 1999, and a more than AD120bn ( €1.1bn ) industry by 2014. There wasn ’ t even a slowdown due to the ball-shaped fiscal crisis, ” Brahim Djamel Kassali, CEO of CAAR and president of the united states of the Algerian Union of Insurance and Reinsurance Companies ( Union Algérienne des Sociétés d ’ Assurance et de Ré assurance, UAR ), told OBG .

Newcomers

Sector profits have been strong adequate to attract new entrants to the marketplace. In addition to the authority of AGLIC, 2015 saw Kuwait ’ s Gulf Insurance Group purchase a 40 % interest in L ’ Algérienne des Assurances. Furthermore, Dubai-based Orient Insurance group was reported to be exploring an expansion into the algerian market earlier in the year. In December 2014, 16 new foreign reinsurance brokers were authorised by the regulators. Hailing from the UK, France, Spain, Lebanon, the US and India, these firms joined 10 others already authorised by the CSA in 2013 to underwrite reinsurance contracts .

Market Penetration

solid premium growth in recent years has brought Algeria into the top 10 indemnity markets in Africa, although it represents merely 0.03 % of the ball-shaped policy market and 1.74 % of the african market .
policy density and penetration remain humble in light of the economy ’ randomness size. swiss Re listed overall premiums per caput in 2014 at $ 40, of which $ 3 was for the life segment and $ 37 was for non-life. That concentration placed Algeria at 80th military position cosmopolitan, while neighbouring Morocco ranked 68th with concentration of $ 102 per head, and Tunisia came in 71st at $ 80 per head. As a percentage of GDP, insurance penetration in Algeria stood at 0.7 % in 2014, compared to 3.2 % in Morocco and 1.8 % in Tunisia. however these measures fail to capture the policy diligence ’ s contributions, said Kassali. “ They are indicators, but they do not represent everything. We have paid out some AD5bn ( €46m ) over the last 15 years, including AD45m ( €414,000 ) per class in car claims entirely, so we are a major force in stabilising the economy. ”

however, there is broad agreement that the industry could play a greater character, and UAR hopes to facilitate that transition and modernise the sector. In 2015, it began efforts under a new three-year action plan to improve industry-wide collaboration, revue diligence regulations, propose changes to policymakers and combat imposter by establishing a national car register, among other measures. Public communication will be an extra precedence, aiming to expand the diligence ’ randomness customer basis by increasing understand among clientele owners and the public about the value of insurance. Kassali told OBG that UAR anticipates launching a public awareness campaign to this impression in 2016 .

Life Segment

With AD6bn ( €55.2m ) in premiums in the beginning half of 2015, the life segment reached 8.8 % of sector market contribution for the time period, compared to 7.1 % for the lapp period in 2014. This expansion continues the segment ’ s swerve of firm growth since market partake bottomed out at 6.5 % in 2012, after a 2011 legal change obliged insurers to segregate their life and non-life activities. Group coverage has contributed 34 % of premiums in the first half of 2015, followed by death coverage ( 30.8 % ), aid coverage ( 21.0 % ) and accident policy ( 18.3 % ). Individual health coverage shrank y-o-y to less than 1 % of the segment ’ randomness premiums for the lapp period, but a 63.4 % y-o-y emergence in group coverage premiums suggests that the depleted uptake in individual coverage is likely explained by greater uptake under group arrangements. Operators in the segment have struggled, however, to overcome the limited entreaty of health insurance products in the boldness of grave express outgo on socialize health worry and sociable security .
After launching new bancassurance products in late 2014, in the fourth stern of 2015 biography segment drawing card CAARAMA unveiled respective new offerings, including individual and group accident coverage, group health packages for employees, and options for class and education savings. Industry executives cite health coverage, retirement savings, travel coverage and other niches as strong potential increase areas, in line with trends across the region. Writing in May 2015, CNA permanent secretary Abdelhakim Benbouabdellah called on insurers to continue to expand the image of product offerings in the personal indemnity grocery store to place it “ at the center of the insurance sector ’ s overall development ” .
sake has besides grown in sharia-compliant takaful ( Islamic policy ) products as a likely driver of increase in holocene years, including in the life section. Salama, the algerian affiliate of Dubai-based Islamic Arab Insurance Company, piloted these products in the algerian marketplace. With AD4bn ( €36.8m ) in annual premiums, its strong sales figures are encouraging others to follow lawsuit. Islamic bank Al Baraka is preparing to roll out a number of takaful life products next year .

Non-Life Segment

In the first half of 2015, non-life premiums grew by 4 % y-o-y to AD62.2bn ( €572.2m ), up from AD59.8bn ( €550.2m ) for the same period in 2014. Despite this growth, the non-life section ’ second relative plowshare of the policy marketplace contracted slenderly, from 92.9 % to 91.2 %, due to stronger premium growth in the life segment. Non-life claims rose 10 % in 2014 to around AD45bn ( €414m ), and have expanded precipitously in the first one-half of 2015, to AD29.8bn ( €274.2m ), a 28.1 % increase on the lapp period in 2014. profit margins for transmit policy have shrunk in recent years amid balloon claims, worrying industry players and analysts. however, displace and assorted risk, department of agriculture coverage and the much smaller credit policy line have showed firm emergence .
so far with AD36.3bn ( €334m ) in revenues in the first one-half of 2015, automotive coverage is the spinal column of the non-life segment and the diligence as a hale, even if profits have seen slower emergence in the stopping point year as fresh challenges have arisen. In an interview with the local imperativeness in November 2015, Nacer Sais, president of SAA, blamed the slowdown on a 30 % drop in fomite imports in the past year, coupled with greater family investment in real estate of the realm. More holocene reports, covering the first gear 10 months of 2015, put the y-o-y significance decrease ampere high as 35 %. At the same time, car claim pay-outs in the first six months of 2015 were 21 % higher than the same period the predate class. Speaking to local anesthetic media in November 2015, Khelifati attributed this leap to a 30 % increase in the cost of spare parts this class. This increase – largely attributable to the fall in measure of the Algerian algerian dinar, as most fifth wheel parts are imported – has caused post-accident repair costs to leap. With more cars on the road, a young population and an expanding highway network, accidents are besides rising overall. According to press reports citing a late UAR cogitation, crashes now cause the Algerian economy some AD100bn ( €920m ) in annual losses .

Challenges

acute price rival in the sector and a ceiling on obligatory policy costs limit insurers ’ ability to adapt to these shifts, though operators are attempting to make incremental changes at the margins. These include efforts to create a national vehicle file to identify bad profiles and adjust premium charges accordingly ; improve service by speeding reimbursement of claims ; and diversify offerings through newly products like pay-as-you-drive insurance, which calculates monetary value based upon distance driven, or automotive aid services. In research of a longer-term solution, the UAR has requested that regulators consider tripling, or at least doubling, the ceiling to allow insurers to stay solvent .
Some insurers are reportedly still struggling to pay a large backload of claims ; some 100,000 customers are estimated to be awaiting claims payments for accidents anterior to 2010. Failing an addition to the ceiling, some indemnity executives say that insurers will have to accept a permanent decrease in auto-coverage premiums and make up the deviation through fresh business elsewhere, likely in serving humble and medium enterprises. UAR ’ mho Kassali said of his own firm that, “ We have big secret clients, including some of the economy ’ south leaders, so if there is a decrease on one side we can make it up on the other. There is an awareness across the sector of the necessitate to prepare, and everyone is doing so, and trying to have a divers portfolio they can rely upon. ”

Sales Channels

Algeria has one steer of sale for insurance for every 28,000 inhabitants, according to CNA figures published in March 2015, but sector operators are expanding their networks while besides seeking new channels to reach electric potential clients and develop new business. Five new insurance brokers were registered in 2015, bringing the grocery store total to 36, according to the CNA. The number of independent agents had besides grown to over 1000 nationally by 2014 .

Bancassurance

Since its authorization in 2006, the expansion of bancassurance through partnerships with commercial banks has given policy players new hope in the market ’ s growth potential. At year-end 2014, the leading bank, Caisse five hundred ’ Epargne et de Prevoyance, reported having signed up 185,000 clients for bancassurance policies in the preceding five years through a partnership with Cardif. Nearly half of these were for “ borrower insurance ” policies that the partners had required of newly mortgage holders, an increasingly park practice across the industry and one that could drive further growth, particularly with the much predict restart of consumer credit loans. The launching of a postal bank by Algérie Poste, which is presently in the works, could quickly expand not alone the bank network but besides that of bancassurance distribution, should the postal service choose to offer insurance products through a future partnership.

Expanding the sector ’ south network is thought to be essential to its mission of educating likely clients on the advantages of insurance coverage. Developing the physical sales network will require that insurers have the human resources needed to staff new points of sale. The industry only had some 7000 target employees in 2000 and by 2015 had over 15,000, but further recruitment will be required to keep expansion on pace. numerous executives have complained about burdensome regulations for opening agencies – including a necessity that a head of agency have five years ’ experience in the industry – which they say hinder their ability to expand their networks .

Rural Market

While the policy market has grown in holocene years, it remains highly concentrated in Algiers ; CNA figures indicate that over 40 % of 2014 premiums came from the capital region, and some more late reports put the trope at over 50 %. rural areas are particularly under-insured, though that tide may be shifting. In recent years, agribusiness common CNMA has led potent growth in the agricultural insurance line. Premiums of AD11.3bn ( €104m ) in 2014, about three fourths of which came from insuring farm vehicles and equipment, gave CNMA 78 % of the farm insurance market share in 2014, making it the area ’ second fourth-largest insurance company by premium volumes. In a sign of precisely how lucrative the agrarian market can be, CNMA saw profits rise quadruple in 2014 to AD476.5bn ( €4.4bn ) after a about nonuple addition the year ahead. Nevertheless, CNMA ’ s Benhabiles told OBG, “ Altogether we cover only 5-6 % of farmers. The potential market is enormous, but we have to raise awareness and besides build the confidence of farmers. So we are engaged in a identical aggressive campaign of communication and airfield visits. ” The life segment besides shows strong growth likely in rural areas ; officials from CNMA auxiliary Le Mutualiste told local media that the number of farmers without social security coverage may be vitamin a high as 89 % .

lookout

Algeria ’ s indemnity industry still has a long way to go before it reaches the penetration and density levels of its neighbours, and insurers are working to raise public awareness and make policy products more widely available. significant growth in premiums is possible across the sector, with the exception of automotive coverage. Agricultural, life, and aid coverage are likely to show hard gains in 2016. Tailoring product offerings and expanding outreach to small businesses will besides prove lucrative as the state works to funnel spending away from imports and toward local production. As Youcef Benmicia, CEO of CAAT, told OBG, “ Insurance can contribute to economic growth, by reducing risks for entrepreneurship and economic action, ” which can be expected to have plus effects across the wide economy .

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