Despite the COVID-19 pandemic, the insurance sector in Morocco continues, on the whole, to demonstrate strength and growth both in the life and in non-life markets, according to a statement issued by the Committee for Coordination and Surveillance of Systemic Risks (CCSRS).
At a meeting on 29 December, the CCSRS reviewed the status of the inter-authority financial stability roadmap covering the period 2019-2021 and analysed the mapping of systemic risks weighing on the national financial system, in the context of the COVID-19 pandemic.
The review indicates that the Moroccan financial sector is resilient despite the pandemic and its economic repercussions.
The CCSRS's main findings are that for the insurance industry, at the technical level, in the first 10 months of 2020, revenue grew 2.7% year-on-year, with an increase of 1.4% for the life branch and 3.7% for non-life. Claims should fall in line, particularly with the suspension of economic activity during the lockdown period.
At the financial level, the investments of insurance companies increased by 4.4% to reach MAD192.4bn ($21.8bn) and unrealised investment gains continued to improve with the stock market recovery.
However, for the first six months of last year, insurance companies recorded a decrease of 25.2% in their net results, mainly because of the underperformance of financial activities during the first half.
In addition, the sector continues to generate a solvency margin well above the regulatory minimum. The excess margins should, however, see a significant decline with the switch to a risk-based capital framework.
After the tensions during the first semester of last year, caused by the uncertainties linked to the COVID-19, the capital market was generally stable during the second half of the year. Banks are seen to have succeeded to preserve their fundamentals in terms of solvency and liquidity. Bank credit to the non-financial sector is expected to grow by 4.3% by the end of 2020, mainly due to fiscal and monetary policy support measures. The growth in bank credit in 2021 and 2022 is forecast at 4.3% and 4.5% respectively. This recovery is particularly beneficial to private companies, says the CCSRS.
The central bank, Bank Al-Maghrib, though expects the Moroccan economy to have contracted last year by 6.6% under the combined effect of the pandemic and adverse weather conditions.
Internationally, the recovery of the world economy observed in the third quarter of 2020 would have slowed in the fourth quarter following the resurgence of infections and remains dependent in the medium term on the large-scale availability of vaccines against COVID-19.
Morocco's banking law established the CCSRS which constitutes a macroprudential surveillance and risk prevention system across the various financial sectors. The Committee is responsible for analysing the risks weighing on the stability of the financial system and proposing the appropriate measures to mitigate the effects of such risks. Represented on the Committee are the Insurance and Social Insurance Supervisory Authority (ACAPS), Bank Al-Maghrib, the Capital Market Authority as well as the Ministry of Economy and Finance.