The current insurance pricing constitutes the minimum level that Palestine’s insurance market can sustain, said the head of the Palestinian Insurance Federation (PIF), pointing to the need for a new actuarial study to review current insurance prices.
A previous study carried out in 2008 had indicated the need to raise insurance premiums immediately, a move which did not take place then because of complex Palestinian conditions.
PIF Chairman Anwar Al Shanti cited some shortcomings that have led to large losses for insurers. These include complicity among some lawyers and doctors in a number of claims cases. He also pointed out that the Fund for the Compensation of Victims of Road Accidents suffers from a lack of clarity in providing compensation.
He made the comments at a recent industry meeting attended by officials of the Capital Market Authority (CMA), representatives of insurers, trade unions and civil society organisations, as well as a number of jurists and academics.
State of the insurance dustry
In his brief presented at the meeting, the Director General of Insurance Control at the CMA, Mr Ayman Al-Sabah, pointed to the presence of nine insurers currently operating in the industry and an unlicensed company in Gaza, as well as one company in the process of being established. The insurers maintained 128 offices and insurance branches in the West Bank and Gaza as at the end of 2016, reported Wattan TV.
Mr Al-Sabah said after-tax profits of the nine insurance companies amounted to US$16.6 million for 2016 on total premiums of $195.6 million. In comparison, after-tax profits in 2015 stood at $7.25 million on total premiums of $164.8 million. The improved financial performance was due to the authorities insisting that insurers adhere to the minimum tariffs.
Motor insurance accounted for the biggest share of the market, at 61% with premiums of $119.6 million last year, followed by health insurance at 15% ($28.7 million), and workmen’s compensation at 9% ($17.4 million).
He said that the Authority is trying to open up more opportunities for insurers by introducing new insurance services, including medical liability insurance which is currently pending endorsement by the Health Ministry.
The challenges faced by the insurance industry include uncompetitive motor insurance products and poor awareness of insurance, he said.
With regard to the prices of insurance services, Mr Al-Sabah suggested that in motor insurance, the driver’s age, gender, type of vehicle, driver’s history, and the nature of vehicle use, are factors to be considered in pricing, as an alternative to the current equation which is based only on the size of the engine, a formulation which the market sees as unfair to some. M