Insurers in Algeria recorded huge losses during the 1Q2020, with premium income falling by DZD6bn ($47.4m), a decrease of 10% compared to the first three months of 2019.
The DZD6bn decrease is significant given that the Algerian insurance market posted an aggregate premium income of DZD142.6bn in 2018.
The fall in revenue was due in part to the new environmental tax imposed on vehicle owners, according to the Algerian Union of Insurance and Reinsurance Companies. Adopted in the new finance law and effective since 1 January 2020, the tax increases car insurance costs by DZD1,500-DZD3,000. This has deterred vehicle owners from buying comprehensive motor cover because of the cost.
At the same time, the ban on the importation of vehicles, combined with suspension of the operations of automobile assembly plants, has greatly affected the performance of insurers.
Furthermore, a provision in the Finance Act of 2020 that would allow dealers to import cars that are less than three years old has yet to be implemented because the regulations enabling this have not been issued. Insurers, which have been counting on these imports to support their motor insurance business, are frustrated by the regulatory vacuum.
Insurers, which are directed to collect the pollution tax on behalf of the government, have also repeatedly protested being thrust into this role without compensation from the government for their costs, but their demand has so far fallen on deaf ears.
In addition, due to the COVID-19 pandemic, insurers have released up to 75% of their employees on unpaid leave and reduced the working hours of retained workers, according to local media reports. They continue to serve customers, especially those who wish to renew their motor policies. M
DZD10 = $0.08