Algeria: Proposal for auto premiums to be at least doubled
Source: Middle East Insurance Review | Sep 2015
A recently completed study on motor insurance premium rates in the country has proposed increases of 100% to 200% in rates that are likely to take effect next year.
Academics at the University of Bab Ezzouar, who carried out the study, have proposed that auto premiums and the ceiling on third-party liability be raised by between 100% and 200%, reported the El Khabar news website.
Local insurance companies said that a 200% hike will help them achieve a financial balance in the motor line. Last year, the industry saw claims of DZD46 billion (US$439 million) for traffic accidents.
However, an industry source told El Khabar that a 200% hike is unlikely to be accepted by the government, while a 100% increase would be considered more reasonable by officials.
The source said that the government would agree to an increase because several insurers have been unable to pay motor claims. At present, about 100,000 people are waiting for compensation from insurers for traffic accidents dating to before the year 2010.
In March 2012, the Ministry of Finance directed insurance companies to pay compensation to the victims of car accidents up to the year 2010, but several insurers have failed to honour the obligation.
The results of the study will be discussed by insurers before they are sent to the Ministry of Finance for review and decision. If approved by the government, the premium increases will be effected starting next year.
Motor insurance accounts for around 60% of total premiums in the Algerian insurance market. The Algerian Union of Insurance and Reinsurance Companies (UAR) has said that for every DZD1 which auto insurers collect in premiums, claims amount to DZD3-4.
DZD100 = US$0.96