Morocco: Regulator cracks down on instalment payments for motor insurance
Source: Middle East Insurance Review | Sep 2015
Moroccan regulators are stating definitively that the collection of auto insurance premiums and the payment of claims are to be immediate, instead of being deferred. The rule is planned to come into effect from March 2016.
At present, the payment of auto insurance premiums in instalments has become a market practice, even though it is unauthorised. It is estimated that 85% of motor insurance customers settle their premiums in instalments. This practice will soon be banned, reported L’Economiste.
“All insurance premiums are to be paid in full. It is on this condition that the insurance policy will be issued,” a circular on the proposed regulation said. The auto insurance market accounts for a third of the insurance sector in Morocco.
The practice of paying auto insurance in instalments has led to account delinquency and affected the financial health of insurance companies. Full payment of premiums should help to clean and stabilise the insurance sector. They would also reduce the frequency at which customers switch insurers.
However, in the interim period until next March, to ensure that the circular has the desired results, insurance brokers and agents are to educate customers on paying their auto premiums in full.