Interview: Hassan Boubrik
What are the main trends in the local sector?
HASSAN BOUBRIK: The domestic market is evolving in a very positive trend, with growth of 10.9% in 2017, excluding reinsurance. The life segment drove this trend, growing 18.8%, supported by the arrival of a new player – Taamine Chaabi – which helped to boost the product line over the last couple of years. Meanwhile, the non-life segment experienced growth of 5.5% in 2017, and the net profit of insurers increased by 25%, a development the stock market reacted to well.
Nevertheless, some factors should be addressed to support greater expansion of the industry. For example, there is huge development potential within the non-life segment, 50% of which is composed of automotive insurance products. Insurers must undertake commercialisation and innovation efforts to diversify the segment. They must also develop new products in areas that show growth potential, such as health. The same goes for corporate profit structures, as revenue is largely tied to automotive products, representing 27% of the whole insurance market. Companies have made significant efforts to upgrade their compensation processes, but there is still room for improvement regarding the level of customer protection. Technological change is also having an impact on the sector, mitigating the need for investment in the distribution network and positively disrupting the market, thereby bringing benefits to both consumers and insurers.
On a regulatory level, the enforcement decrees covering natural events and civil liability are set to be published soon, and they can be expected to positively impact the sector. Furthermore, in mid-2018 we held several meetings with the Supreme Council of Islamic Scholars to draft a legal framework to enable the growth of the takaful (Islamic insurance) segment.
It is important for customers to be able to have the option of sharia-compliant insurance products. Indeed, over time we believe that takaful could develop an overall share of the market of between 5% and 10%.
How will the market be affected by the implementation of a risk-based solvency regime?
BOUBRIK: The new regulatory regime will bring important changes to the industry. The objective is to strengthen the quantitative and qualitative capacities of Moroccan insurers. Our prudential regulation, governance and risk management will need to be upgraded to comply with international standards. In order to do so, we held several meetings with the Moroccan Federation of Insurers and Reinsurers to design and shape this new prudential framework. A draft circular was then released, and impact studies were launched to evaluate and adjust the circular.
We now have a relatively stable draft of the circular, particularly with regard to the second pillar of the framework, which covers governance and risk management. This new regulatory regime aims to support insurance companies in the development of their corporate governance, risk management, audit capacities and information technologies systems. I believe that in addition to a sound supervision of the authority, self-regulation by the companies, within a good governance and risk management framework, can insure improved stability for the market and more protection for policyholders. We expect that the circular’s second pillar will be adopted in the course of 2019, and the others to be adopted by 2020.
How do you expect the new regulatory regime to affect the reinsurance segment?
BOUBRIK: ACAPS is working closely with the Ministry of Economy and Finance to design a specific framework for reinsurance. ACAPS strongly believes that an open reinsurance market will provide many benefits to the industry and, ultimately, to policyholders. The prudential approach is changing, and solvency capital requirements will consider the ratings of the reinsurers. The Société Centrale de Réassurance (SCR) will have to adapt its strategy to evolve in this context.
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