Algeria: Insurers deem phased CTPL tariff rises as inadequate
Source: Middle East Insurance Review | Feb 2017
The phased increase in tariffs for compulsory motor third-party liability insurance that took effect last month is deemed insignificant and losses in automobile business will rise, according to Mr Hassen Khelifati, Chairman & CEO of Alliance Assurances, and Vice President of the Algerian Union of Insurance and Reinsurance Companies (UAR).
The Treasury Department announced last December that the increase in motor tariffs is to be staggered over four semesters, maxing at 20% by the end of the fourth semester. The schedule, adopted by the Treasury Department and sent to the UAR, specifies that non-life insurers are obliged to apply a “progressive” re-adjustment of premiums as follows: +5% each time with effect from 1 January 2017, 1 July 2017, 1 January 2018 and 1 July 2018.
Mr Khelifati estimates that an increase of DZD90 (US$0.81) over a six-month period is not significant compared to what insurers pay out in claims compensation, reported Maghreb Emergent.
“For each dinar paid in premiums for motor third-party liability cover, insurers pay out between three and five dinars in automobile claims,” he said.
He added that it was most worrying that the price-cutting by some insurers does not conform to “business logic” and is threatening the survival of many companies.
He said that undercutting and unfair competition must be stopped with the intervention of the market regulator who must ensure that insurers are able to meet their commitments in relation to the premiums charged.
DZD1 = US$0.01