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Algeria: Privately held insurers up in arms over limits set by bank

Source: Middle East Insurance Review | Jul 2018

State-owned insurers are allowed to underwrite credit risk for businesses to an unspecified amount, while privately held insurers are limited to underwriting risk amounting to less than DZD500m ($4.3m), according to a document issued by the Foreign Bank of Algeria (Banque Extérieure d’Algérie or BEA) that has been made available to the local media. BEA is Algeria’s biggest public bank.
 
The publicly-owned insurers are SAA, CAAR, Cash, CAAT, CNMA and AXA Algeria, reported All About Algeria. AXA Algeria has three shareholders, namely, AXA Group (49%), the National Investment Fund (36%) and BEA (15%). The latter two are state-owned.
 
However, the insurance coverage by privately held insurers – CIAR, Alliance Insurance, Insurance 2A, Cardiff, Salama and Trust Algeria – is valid for credit granted of between DZD100m and DZD500m.
 
Alliance Insurance CEO Hassen Khelifati has described the BEA’s decision as “scandalous, unacceptable and discriminatory”.
 
He claimed to have contacted other private insurers for joint action, including talks with the CEO of the BEA, the Ministry of Finance, the Bank of Algeria and the Association of Banks and Institutions (ABEF).
 
Mr Khelifati said the BEA document is irrefutable proof of discrimination against private insurers. “This is the first time a document reveals that instructions exist to favour public sector companies,” he said.
 
To him, this discrimination aims to “maintain the monopoly” of state-owned insurers and prevent privately held insurers from “gaining weight” in the insurance market.
 
“There are no technical criteria for reinsurance or managerial capacity that the BEA can rely on to justify this exclusion of private insurers,” said Mr Khelifati.
 
He added that “the financial and reinsurance capacities of private insurance companies can be a minimum of DZD5bn per risk”.
 
“These recurrent practices are anti-constitutional and create a distortion in the treatment of both sectors,” he said.
 
This is not the first time privately held insurers have protested the discrimination they face in the insurance market. Last December, they wrote a letter to Prime Minister Ahmed Ouyahia decrying “anti-competitive practices” of which they are victims to the benefit of state-owned insurers. M 
 
DZD100 = $0.85
 
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