Interview: Moulay Hafid Elalamy
What are the fiscal incentives in the 2011-15 Programme Contract for the insurance sector?
MOULAY HAFID ELALAMY: Developing the insurance sector can be a good means to an end in terms of increasing liquidity rates. The tax regime is an important lever in this respect, as fiscal incentives can help drive long-term savings. Fiscal incentives are a very efficient way for the government to focus insurance companies’ resources on non-listed stocks. To achieve this, insurance companies should be authorised to invest their technical reserves towards priority sectors of the Moroccan economy.
Overall, the reforms undertaken as part of the 2011-15 Programme Contract should allow insurers to be able to invest up to Dh200bn (€17.8bn) by 2015, and lead to growth in revenues in the sector. However, one difficulty in implementing the programme is the fact that no less than nine ministries plus the Moroccan Federation of Insurance Companies are involved in this project, resulting in complex coordination. I hope that we will indeed be ready by 2015.
How will the introduction of Islamic insurance, or takaful, affect the Moroccan insurance market?
ELALAMY: The impact of introducing Islamic insurance in other countries has been rather limited. It has not been an extraordinary success. In Saudi Arabia for instance, the results have been rather disappointing. No new insurance company has emerged there as a result of the introduction of takaful.
There has to be a large number of potential clients for takaful to be successful. In my opinion, you cannot take a foreign model for takaful and simply implement it directly as it stands in Morocco – nor can you for Islamic banking. You need to find a model that matches the demands of Moroccan clients themselves.
Muslims around the world do not have a common understanding of what constitutes takaful – there is no single notion. Given the results elsewhere, I would be surprised if takaful would take off in Morocco.
To what extent can the challenge of implementing the Solvency II criteria be overcome?
ELALAMY: In Morocco we take the implementation of Solvency II very seriously. However, I believe that there is a need to make a worldwide evaluation of the Basel III and Solvency II agreements, one of the reasons why we have such strict rules is only due to some cases of fraud and financial mismanagement that were badly handled by the authorities in some countries. Fixing such incidents by imposing strict rules could actually lead to choking the market. Basel III and Solvency II thus represent excessive desires for control, and developed countries need to understand the importance of reassessing the aforementioned regimes.
One result of these strict rules is that while there is a desire for insurance companies to invest in the economy, the government does not provide fiscal incentives, claiming that this is not permitted under Solvency II. This is not acceptable. Hence, every country needs to make a risk assessment and determine to what extent Solvency II should apply in their jurisdiction. As a global standard, Solvency II simply does not make any sense.
Are there any obstacles for Moroccan companies in entering other markets in Africa?
ELALAMY: There is a tendency to think that Africa is mired in problems and a dangerous continent to invest in. But if you look at Morocco, things are not as complicated as one may think – at least not more so than, say, in Europe. In fact, Moroccan investments in Africa have reaped significant results so far, better than in the US, Europe or even Morocco itself. The potential is also great, since while in the West, insurance spending equals roughly 9-12% of country GDP, in Africa (except South Africa) this averages only 0.5% to 3%.
There are also synergies between banks and insurance companies that can be pursued when investing in Africa. Specifically, health insurance is something that can be developed on the continent since the needs are considerable and the availability rather limited.
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