AM Best has released a new report, “The Maghreb – One Region, Three Unique Insurance Markets,” which examines the long-term prospects of the three insurance markets of the region.
Despite the countries being so close whilst having many commonalities, the insurance markets of Morocco, Algeria and Tunisia couldn’t be more different when it comes down to their economics, demographics and culture.
The long-term prospects of the insurance markets of the Maghreb region have reached above global standard, as well as demonstrating solid growth trajectories over the past five years.
AM Best has reported this to be an expected continuing trend, despite the near-term challenges resulting from the COVID-19 pandemic and the resulted economic downturn.
Since COVID-19 has hit, local authorities, regional regulators and other stakeholders have realised the importance of the sectors role in supporting economic activity, despite insurance penetration remaining below the 7.2% world average.
As a result, improving insurance penetration rates are being taken under as a regional priority, particularly through the introduction of new personal lines products in the under- developed retail insurance sector.
There’s an expectation of a positive contribution towards future insurance growth as there will be a change in demographic, along with an ageing and a more risk-aware population.
However, AM Best notes there are numerous challenges in the short- to medium-term, which have the potential to limit the region’s insurance expansion.
These challenges include political and economic pressures, the population’s negative perception of insurance, and the evolving nature of regulatory and governance frameworks.
In addition, the COVID-19 pandemic (and its knock-on effects on financial markets and economies worldwide) is expected to adversely impact the growth prospects of local insurers in the near-term.
In recent years, the Maghreb region’s insurance markets have demonstrated good growth trajectories and solid technical fundamentals.
AM Best has reported characteristics across the to be conducive in developing the insurance markets and providing new products. These developments should result in increasing premium volumes and improved insurance penetration rates over the long-term.
However, economic and structural barriers are likely to constrain growth in the near-term.
A key driver of prospective development will be the length and depth of the economic fallout from COVID-19 and the resilience of the region’s economies to this challenge.