The Algerian government has adjusted motor third-party liability (MTPL) insurance premium rates and banned cash payments for compulsory insurance policies. This dual initiative aims to ensure the financial viability of insurance companies while modernising industry practices through digitalisation.
On 1 July, the government instituted the second phase of premium adjustments for MTPL insurance policies. In December 2024, the government announced a total increase in 30% in MTPL premiums. The increase was implemented in two phases: 15% wef 1 January 2025, and the remaining 15% from 1 July. On average, this increase represents around DZD600 ($4.65) on the annual motor insurance premium, split into two tranches of AED300 each.
Mr Hassan Khelifati, a member of the board of the Algerian Union of Insurance and Reinsurance Companies, told the local media, "These increases remain modest. They are primarily aimed at rebalancing the accounts of insurers, who have long suffered from losses in the MTPL insurance branch.”
He told the local news organisation, Echourouk, "We sometimes pay between DZD8 and DZD16 in compensation for every dinar collected in MTPL premiums. This is no longer sustainable."
The cost of claim compensation for insurance is rising because of increases in the prices of vehicles and spare parts.
Cashless premium payments
Another major change is the ban on cash payments for compulsory insurance policies as set out in the 2025 Finance Act.
Mr Khelifati said, "Even though the implementing regulations have not yet been published, we have begun adopting this measure. We can no longer accept cash payments for mandatory insurance."
This change to cashless payments has not been without its challenges. Among the obstacles faced, many customers do not have bank cards. Furthermore, there is weak Internet coverage, particularly in rural areas. In addition, some insurance agencies were not equipped with electronic payment terminals.
However, insurance companies have gradually overcome these obstacles by introducing alternative digital solutions, such as electronic phone payments and installing electronic payment terminals at agencies.
Digitisation is not new in the Algerian insurance market. In 2020, the Algerian government rolled out the gradual digitisation of vehicle registration certificates. In 2022, a measure was adopted to establish a national online database of insured vehicles, allowing law enforcement and judicial authorities to make instant checks on whether a vehicle is insured.
The digitalisation drive lays the foundations for a more modern and responsive administrative ecosystem better suited to the needs of customers.
Mr Khelifati also commented on the diminished contribution of the insurance industry to the economy: “In 2000, Algeria’s gross domestic product was $55bn, and the insurance sector represented 1.8% of it. Today, when the GDP has reached $270bn, the insurance sector only contributes 0.4%.”