Will Car Insurance Rates Go Higher in Algeria?

The National Federation of Insurance and Reinsurance Companies and the National Insurance Council submitted their proposals to the Ministry of Finance regarding the new insurance law that is under preparation, including raising the prices of the “civil responsibility” product for cars.

The two organizations demanded to raise the prices of this product, which remain low, according to them, despite the increase that was approved two years ago on four parts, as the sector’s dealers confirm that they lose 3.75 dinars in compensation for traffic accidents for each dinar of contributions to the civil liability service, which worsens the financial situation of insurance companies in Algeria, as they explained.

The Vice President of the National Federation of Insurance and Reinsurance Companies, Hacène Khelifati, told Echorouk that reviewing the insurance law has become more than necessary during the next stage, as the new legislative text is currently under preparation at the Finance Ministry’s level.

“Dealers are calling for the prevention of unfair competition in the national insurance market, the elimination of dumping abuses and illegal price reductions committed by some dealers, and before that the completion of the installation of members of the control authority to impose the necessary penalties on transgressors, not to mention the fixing the prices of services and products, to prevent any breaches in this framework”, he added.

“The insurance companies have recently lost a large part of their turnover due to the Coronavirus repercussions, and the subsequent closure of travel and movement, quarantine procedures and a decline in economic activity, as the sector was greatly affected by the decision to stop importing and producing cars locally”, the spokesman explained, revealing that with the demise of travel restrictions and the beginning of the disappearance of the Corona pandemic, the sector’s numbers have relatively returned in recent months to what they were before 2019 and that the turnover of the insurance sector in Algeria is today equivalent to one billion dollars, or 130 billion dinars.

Khelifati spoke about the General Assembly of the Arab General Insurance Federation, expected to be held on Monday in Oran, which, according to him, will include lectures on the reality of insurance after the Corona pandemic, with the attendance of 1,300 participants, including 800 foreigners from 5 continents and 40 countries, and 500 local participants from insurance and reinsurance companies, insurance brokers and sector experts, where various insurance issues will be dealt with.

“Algeria is currently today raking at the bottom in terms of the insurance sector’s contribution to the gross domestic product, which is equivalent to 1.5% in the Arab world and 7% internationally, but in Algeria, it is still reaching 0.7%, in light of the delay in reforms and the unfair competition that dominates the transactions of some insurance companies in the Algerian market”.

Regarding the Takaful (interdependence) insurance file, Khelifati asserted that some companies have launched takaful offices, the first of their kind in Algeria, including two public companies, and some private dealers who started preparing for the file pending the completion of the legislation framing the process, which would open the doors extensively to this kind of new services in the Algerian market.