Auto, Travel Insurance Companies Lose DZD300B In A Year
Insurance companies that are active in the national market will meet at the beginning of March, under the cover of the General Union of Insurance and Reinsurance Companies, to discuss the financial situation of the companies, which declined significantly during 2020, and the beginning of 2021, due to the coronavirus repercussions and the suspension of car imports, and even the failure to licence the import of -3 years old cars, the suspension of flights and the “Schengen” visa, which caused these companies losses amounting to DZD 300 billion from their turnover in a year of quarantine.
Insurance companies will meet soon to assess the financial situation of these companies, which have collapsed dramatically during the past months due to the absence of new cars from the Algerian market, whether imported or even locally installed in factories that faced closure and stopping production after the corruption scandals that affected them, knowing that the branch of Accident and Auto insurance represents 55% of these companies’ portfolio.
Insurance companies also lost large sums due to the suspension of travel insurance operations as a result of the freezing of air and sea transport towards abroad from March 15, 2020, until today, and stopping the issuance of the Schengen visa, which was contributing to the revitalization of the portfolio of these companies. This category represents insurance for people ranking second in the top insurance companies after insurance for accidents and cars.
The extent of the implementation of the agreement to stop the dumping policy ordered by the Finance Ministry last December, to prevent reductions of up to 50% in prices, which caused unfair competition between insurance companies and the adoption of the policy of dumping by some of these companies, will also be addressed after they find themselves unable to compensate their customers. As a large number of uncompensated files accumulated on the table of insurance companies, in addition to the non-payment of instalments by customers and procrastination.
This comes at a time when the Finance Ministry ordered insurance companies that are active in the national market to recover the accumulated debts of customers and unpaid instalments that amounted to August 31, to DZD 685 billion, with a sharp increase that threatens the financial position of companies.
Sources from the insurance sector confirm that these unpaid premiums reached DZD 700 billion at the beginning of the current year, and the Finance Ministry confirmed that customers who do not pay the instalments as stipulated by the law do not benefit from the necessary guarantees if accidents and disasters occur.
Thus, institutions and groups that benefit from special privileges with insurance companies, represented in significant discounts reaching half, will be obliged to conclude more serious contracts, starting from July 2021, including public companies that do not pay 50% of the insurance bill, as the prices of these reductions reached the limits of 30% by the Finance Ministry.