News Middle East13 Jun 2021

Algeria:Insurers owed more than US$740m in premiums

| 13 Jun 2021

Insurance premiums owing by businesses and even public institutions to insurers in Algeria are estimated to rise to DZD100bn ($749m) this month, from DZD60bn in September 2020, according to a source with the Algerian Union of Insurance and Reinsurance Companies (UAR).

Some attribute the reason for this to general economic, commercial and industrial stagnation. The impact of the COVID-19 pandemic has compounded the economic crisis that had already prevailed before the pandemic. Algeria has been hit by the collapse in oil prices, decline in imports, and stagnation in investments. On top of these, insurers face challenges like a halt in the import of cars since 2018 when motor insurance is the biggest branch of business. The COVID-19 pandemic has led to the stopping of travel, when travel insurance used to be the second best-selling product of insurers.

A large number of businesses have become insolvent and their payables to insurance companies remain outstanding.

The UAR has lodged an appeal with the Ministry of Finance to review the insurance law to resolve the situation, reported Echoroukonline. Specifically, they want a review of the insurance law 95-07 that stipulates in one article, “In a contract of a fixed term, the coverage does not take effect until the next day, at midnight, from the payment of the premium, unless otherwise agreed.”

A UAR spokesman told the local media that insurance companies had previously sought through the 2021 Supplementary Finance Law to stop activating insurance coverage before the receipt of premiums, meaning that the customer would lose the right to compensation on a policy if the premium was unpaid. However, this attempt failed. As a result, insurance companies are in a tough situation.

Algeria rates as “very high risk”

Meanwhile, French credit insurer Coface has given Algeria a 'D' country risk rating, placing the northern African nation among “very high risk” countries, and painting its economic and financial prospects to be “uncertain”.

Coface indicates that prospects are gloomy mainly because of the drop in oil revenues since 2014, which was aggravated in 2020 by COVID-19. And for the current year, the recovery is forecast to be modest. The direct consequence of this situation is the continued decline in foreign exchange reserves which dropped from nearly $180bn at the end of 2014 to less than $50bn at present. This would in turn lead to the depreciation of the dinar and imported inflation.


 

| Print | Share

Note that your comment may be edited or removed in the future, and that your comment may appear alongside the original article on websites other than this one.

 

Recent Comments

There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.