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The Stakeholder Support Project for Inclusive Insurance in Algeria was launched on Thursday as part of the Global Initiative on Insurance and Risk Financing Facilities (IRFF), launched by the United Nations Development Program (UNDP).
As chairman of the opening ceremony of the workshop dedicated to the launch of the project, the Minister of Finance Laaziz Faid emphasized that this project aims to strengthen the capacity of stakeholders in the field of insurance, to develop inclusive insurance solutions, to raise awareness among citizens of the importance of this area and to promote mechanisms adapted to risk financing.
The Minister indicated in this context that the State expects this initiative to represent a major contribution to the development of the insurance activity in Algeria, which is still below the great potential of the Algerian economy.
Furthermore, Mr. Faid lamented the sector’s low share of the Gross Domestic Product (GDP), which does not exceed 1%, despite the continued growth of insurance activity in Algeria and the increase in the sector’s turnover from DA 23 billion in 2006 to DA 162 billion in 2023, thanks to several reforms, to mention only the liberalization of the insurance activity and the adoption of Takaful insurance.
According to the explanations given, this initiative follows a diagnostic study of the insurance market in Algeria, carried out by UNDP and the Ministry of Finance in 2021, which revealed that the activity did not cover all categories, especially citizens and investors in agriculture. , which is affected by climate change and natural disasters (only 10% of farmers have insurance contracts).
Several factors have led to this situation, including high prices, the offer limit, lack of trust between the insured and the insurance company, in addition to other reasons of a cultural and religious nature, which prevent some Algerians from adopting insurance offers, as well as the legal framework that partially covers climate risks .
According to the study, the state bears significant financial burdens to cover major risks through special funds to finance these risks, with insurance companies’ coverage remaining “limited”.
For his part, the director of insurance in the Ministry of Finance, Kamel Marami told APS that this project includes three main axes, namely, raising awareness among citizens and economic operators about the importance of insurance, training managers insurance companies about the obligation of inclusive insurance in addition to training insurance activity controllers among the Ministry of Finance’s managers with a view to regulating the activity.
This project, whose value amounts to 500,000 USD and funded by the German Federal Ministry for Economic Cooperation and Development, will benefit from “the support of recognized international institutions with experience in the field, to instill a dynamic positive and to raise the performance of the insurance sector in Algeria,” explained the UNDP representative in Algeria, Natasha Van Rijn.
The German ambassador in Algiers, Georg Felsheim, for his part, emphasized that the project to which his country is contributing should create important solidarity mechanisms, especially with vulnerable categories of society.
On this occasion, the representative of the Ministry of Foreign Affairs, Manel Ayoubi, noted that climate risks have cost the state a large financial burden, making its commitment to international initiatives in the field of insurance one of the options that are effective in terms of managing financial risks associated with climate change.
APS
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