Morocco: Insurers turn to new financing modes for auto premium payments
Source: Middle East Insurance Review | Jan 2020
Several insurers have created alternative solutions for the settlement of motor premiums following a decision of the Ministry of Economy and Finance to prohibit payment by instalments.
The ministry’s new rule obligates insurance brokers and agents to receive the premiums due in one payment from the customer, slated to begin in April. This requirement places a financial burden on policyholders who cannot afford to make large lump sum payments.
To help policyholders, several insurers have entered into partnerships with financing companies for the latter to offer loans to policyholders to fund the premium payments, with the loans repayable in instalments. Other insurers are working with banks, according to a report in the newspaper Al-Sabah.
The ministry issued the regulation in the wake of mounting debts owed to insurers by brokers and agents. The inability to pay up has led to the imprisonment of a number of intermediaries after insurers took them to court.
Consequently, this matter has caused a wave of anger among intermediaries, but no compromise has yet been reached between them and insurers.
Insurers were quick to provide alternative solutions to prevent the situation getting worse, and that will relieve intermediaries of any liability.
Motor insurance is the largest non-life class of business in the country. M