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North Africa Insurance Report 2009
Market |
Finance and Banking |
Report Type |
Market Research |
Country |
Africa |
Published |
26 March 2009 |
Number of Pages |
87 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
The insurance industry in North Africa – Morocco, Algeria, Tunisia and Libya – continues to be challenged by a lack of economies of scale. The table below shows that the four countries collectively generate a little more than US$3,814 in gross written premium, but that Morocco is the largest market by a significant margin.
The global financial crisis is likely to hamper further business development for the time being, but the characteristics of the region that have already driven significant growth in insurance consumption remain in place. The boom in energy prices cited in our last report may have waned, but North African countries continue to expand their participation in global markets on the back of petrodollars, insurance industry environments are becoming increasingly liberal and, particularly in Algeria, Tunisia and Libya, there is much room for growth.
The exception to this last rule is Morocco, Africa’s second largest insurance market, which has consistently achieved double digit percentage growth over recent years but may now see a slowdown in growth. It has also has the most liberal rules on foreign ownership. However, consolidation in the sector, with five major players now dominating the market, which benefits consumers, may turn international insurers away from Morocco.
Two of the five majors are already controlled by French multinationals – AXA and Société Générale.
However, the other three, including RMA Watanya – the largest insurance company in North Africa (outside Egypt) is owned by Moroccan interests.
The implementation of the US-Morocco Free Trade Agreement last year has yet to feed through to developments in the insurance market.
In Algeria, the region’s second largest insurance market, industry growth also stands at around 10%.
However, it is less liberal than Morocco, as the insurance sector is monopolized by state-owned companies, although there have been recent hints that regulators are prepared to accept foreign players.
Furthermore, on the back of the government’s US$60 billion five-year investment programme, the insurance markets total turnover is expected to pass US$1 billion by 2010.
Tunisia and Libya are slowly starting to open their insurance industries up to commercial interests, after several years of domination by state-owned companies. Tunisia’s formerly state-owned STAR, which dominates that market, is now a listed company, and part owned by French giant Groupama, which has replaced Generali, which owns Maghrebia, as the main foreign group active in the country. The remaining companies are typically owned by Tunisian business/financial interests, mutuals or small and specialised insurers. Life insurance appears to be growing very quickly from an extremely low base.
Libya’s re-emergence on the global stage after several years in the wilderness has had an impact on the insurance sector. The Insurance Supervision and Control Authority started operating at the start of last year. Libya Insurance Co (LIC), of which 40% is now publicly listed, controls 36% of the overall market.
However, premium size continues to be tiny for a country with massive natural resources. Its status as one of the top oil and gas producers in Africa should be reflected in the market, but instead penetration rates remain less than 0.5% and insurance density barely reaches US$28. By the same token, Libya has huge untapped potential
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