Interview: Hassan Boubrik
What are the practical benefits of the creation of an independent insurance regulator?
HASSAN BOUBRIK: ACAPS aims to meet the best international standards in terms of organisation and governance, with enhanced financial and human resources. The board of the authority is mainly independent and includes a representative of the minister of economy and finance, the chairman of the supervisory authority of capital markets, a judge from the high court and three independent members. The authority is also fully independent because of an enhanced budget, which allows us to hire experts from the industry. Attracting the best talent from the financial and insurance sectors is indeed critical, due to the high complexity of products and the constantly evolving regulatory environment. Furthermore, the implementation of an independent body will strengthen regulation that applies to retirement mutual funds.
As a result, the practical benefits of an independent regulator will have a long-term impact on the regulatory framework and processes. We expect a significant impact within two years. For instance, a department in charge of the protection of the clients of insurance companies will be created with further financial and human resources. Enhanced control over insurance companies will eventually lead to a more sound and stable insurance system.
How do you envision the depth and the pace of the implementation of new regulations?
BOUBRIK: Regarding depth, insurance companies still do not take into account all kinds of risk when assessing their solvency margins, including, for example, market risk and operational risk. In other words, we need to move towards more subtle calculations.
Nevertheless, we should also be taking appropriate decisions based on the specific nature of the Moroccan market. Traditional products account for almost 100% of the market. We do not have any trading or securitised products, which would lead to the implementation of further regulation.
Regarding the pace of implementation, we will progressively introduce new regulations with renewed thresholds on a case-by-case basis to bring further stability to the sector over the next five years. However, we need to reach an agreement with operators regarding rules and thresholds in a year or two.
To what extent can the delivery of new insurance licences boost the sector’s growth?
BOUBRIK: In 2016 we have delivered three new licences for companies that brought added value to the sector. The Moroccan insurance market must remain open to new entrants whatever their origins, national and international, and whatever their capital. However, the authority will keep an eye on three criteria: collateral, seriousness and the value added to the market. Despite being the second-biggest in Africa, Morocco’s insurance market is relatively small at just $3bn, and so we cannot let 40-50 companies in. This would help neither the operators nor the customers. Against this backdrop, there are certain segments in which consolidation is likely to be needed, notably in non-life insurance. However, we are open to ideas in life insurance on a case-by-case basis.
What is the expected impact of takaful (Islamic insurance) products on the market?
BOUBRIK: In the wake of the arrival of Islamic finance, we need to provide takaful products alongside sharia-compliant financial products. For example, if an individual purchases a mortgage, the bank should also be able to offer related insurance. Takaful must meet a concrete need from the market. Then we will progressively develop other products in segments that we consider dynamic enough. In other words, there will be more opportunities arising than challenges as long as we take things step-by-step.