Insurance: The sector confirms its resilience

Abdelkerim SAHBEDDINE
Director of insurance regulation and standardization at ACAPS

How do you read the situation in the insurance market to date?
First of all, it must be remembered that the insurance sector has shown good resilience despite a national economy under pressure since the outbreak of the health crisis. It actually continued its growth rate at the end of the first three quarters of the year. The amount of issuance thus increased by 7.7% compared to the same period in 2021 to 42.4 billion dirhams.

This growth is supported by the two lines of insurance, life and non-life. Life insurance thus increased by 9.5% to 19.8 billion dirhams, while non-life insurance grew by 6.1% to 22.6 billion dirhams. At the end of June 2022, the insurance sector continued to post a profit since the end of the health crisis.

The net profit thus reached 2.8 billion dirhams, an increase of 19.2% compared to the first half of 2021. In line with the development of technical activity, the investments allocated to the operation of insurance companies increased by 2 .3% compared to the end of December 2021. They exceeded 200 billion dirhams, or 71.2% of the total assets of insurance and reinsurance companies. Overall, the direct insurers’ investment strategy is unchanged. They are still exposed to interest rate and equity risks in a context of volatility in the financial markets.

What are the major projects in the sector that ACAPS is currently focusing on?
In addition to projects related to social welfare, which are part of the royal project carried out by His Majesty King Mohammed VI, may God help him, which aims to generalize social protection to all our citizens. , the Autorité is also investigating several projects relating to the insurance sector. These include, among others, the implementation of the “SBR” (risk-based solvency) supervisory framework, the definition of strategic guidelines for the promotion of digital insurance and the strengthening of financial inclusion, the dematerialization of the insurance certificate “Motor Civil Liability” contribution to the establishment of a legal framework regarding microinsurance and the contribution to the revision of Book IV of the Insurance Act on insurance distribution.

What about the activity of insurance brokerage, since the players have been waiting for the overhaul of Book IV for several years, where are you?
The network of insurance intermediaries currently has 1,565 insurance agents and 473 insurance brokers with an average annual growth of 3% over the past 10 years. This growth partly contributed to the dynamism of the national insurance market (annual growth of 7.6% over the same period). However, the intense competition in the insurance distribution market and the digital revolution can pose a challenge for insurance intermediaries.

The latter are therefore encouraged to adapt and revise their business models in order to meet the challenges and take advantage of the opportunities that digital transformations provide. Considering the important role of insurance intermediaries in the development of the insurance market, and aware of the importance of the challenges they have to face in this context characterized by digital transformation, ACAPS has launched several initiatives aimed at supporting insurance intermediaries, as part of this transformation process. In particular, it initiated the amendment of Decree No. 2.18.1009, which was adopted by the Insurance Law, to allow intermediaries to carry out other activities to diversify their income (agent of a payment institution and manager on behalf of claim files and/ or administrative services for the benefit of public bodies).

With regard to the revision of Book IV, it should be noted that a joint commission consisting of representatives of the Authority and the Ministry of Finance has been working on this subject for several months. On the methodological level, it was first necessary to converge the visions and decide on the axes of the reform, between us, the authority, guarantor of the application of standards and good practice, and the Ministry of Finance, which monitors the adequacy. of the reforms with the government’s general policy and the country’s strategic orientations before starting legal drafting. When this work is completed, we will initiate consultations with the various stakeholders.

Is the digitization of the sector underway? What needs to be done in this direction?
To accelerate and support the sector in the process of its digitization and enable it to adapt to major global technological trends, the authority has entered into a partnership with the International Finance Corporation (IFC), a member of the World Bank Group, with the aim of defining strategic guidelines to promote digital insurance and strengthen financial inclusion.

In the same direction, the Authority intends to initiate a reflection on a major reform of the Insurance Act together with the sector. Among the objectives of this reform is the establishment of a legal and regulatory framework for the coming years, thus anticipating future developments throughout the value chain, encouraging innovation and making it possible to take full advantage of the dynamism of the numerical revolution induces. In the meantime, the supervisory authority has issued an instruction regarding the online sale of insurance products. This instruction clarified the legal requirements and preserved the rights of policyholders. Today, operators, including insurance intermediaries, can establish remote sales solutions or even digitize the entire value chain, from underwriting to claims management, subject to compliance with legal requirements. .

Where are we in the development of the Takaful activity?
Takaful insurance, which is an important pillar of the participating ecosystem, was launched in 2022 after reaching an important milestone in 2021 with the completion of the regulatory corpus and approval for four Takaful operators and a re-takaful window, which presents an insurance offer that includes some sixty products. The regulator, it will be recalled, also authorized seven participating banks and insurance brokers to market certain Takaful insurance activities. This activity makes it possible to meet the needs of participatory banking customers, especially insurance business in case of death/disability and multi-risk buildings. It will also cover savings insurance products called “Takaful Investment”. In the third quarter of 2022, production started for this segment with a total premium volume of 2.7 million dirhams. Of this turnover, 89% is drained by death insurance, against 11% for fire insurance.

What role can ACAPS play in generalisation from AMO?
First, it must be remembered that the acceleration of the AMO generalization project was inspired by the adoption of the framework law No. 09-21 on social protection, which, on high royal instructions, established a timetable for this generalization. The priority is thus to create health coverage for the benefit of populations that do not have it.

In this context, it should be remembered that even before the announcement of the aforementioned framework law since 2018, a significant effort has been made to expand medical coverage for the benefit of certain categories of self-employed persons. This process, which accelerated from 2021, concerned in 2022 persons unable to pay their own contributions (especially RAMED beneficiaries). By virtue of its powers laid down in Law No. 64-12 establishing it, ACAPS was directly invited to participate in the effective implementation of this major project through the opinions it issued on a number of projects, legislative and regulatory texts relating to this generalisation .

Within the framework of its tasks and in the light of the technical expertise that its employees have acquired, the authority also has the role of supporting the public authorities in this project through, among other things, conducting studies that make it possible to measure the effect of any expansion – or reform scenario of the technical and financial balances of the various schemes and contribute effectively to the establishment of better coordination between the basic coverage and the supplementary coverage, which is considered to be an important axis in the improvement of medical coverage. ACAPS can also, when called upon, make recommendations on the configuration to be adopted and the steps to be taken within the framework of the reform of the social welfare sector, including the generalization of the AMO.

Sanae Raqui / ECO Inspirations

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