Market penetration increasing, with particular growth in Algeria's life insurance segment

The insurance sector in Algeria has grown more than five-fold since the 1990s, but it still remains small relative to the size of the economy. The market is characterised by low penetration and density of coverage, and is dominated by non-life coverage, representing some 93% of premiums, with automotive coverage alone accounting for half the sector’s revenues. However, the life segment has grown rapidly since being partitioned from the non-life segment in 2011. Product diversification and intense competition are also driving growth in new niches areas like agricultural insurance, bancassurance and assistance coverage. Better efforts to raise public awareness as to the advantages of insurance coverage, coupled with expanding networks of sales channels, can help the industry navigate the expected risks and challenges precipitated by the drop in oil prices and state spending.

Market Landscape

Algeria’s insurance market includes 24 companies, according to the industry group National Insurance Council (Conseil National des Assurances, CNA). Since a legal change in 2011, general insurers have been divided into their life and non-life components, with the non-life segment accounting for some 93% of the insurance sector’s AD125.5bn (€1.2bn) in total premiums in 2014, driven primarily by sizable volumes in the auto and industrial lines, at 52% and 34% of global sector premiums, respectively.

A total of 13 firms compete in the non-life segment, led by three state-owned insurers: Société Nationale des Assurances (SAA), with 21.2% market share in 2014; Compagnie Algérienne des Assurances (CAAT), with 16.1%; and Compagnie Algérienne d’Assurance et de Réassurance (CAAR), with 12.8%, according to figures from the Ministry of Finance. Privately owned firms lagged further behind, led by Compagnie Internationale d’ Assurances et Réassurance (CIAR), with 7.1% market share; and Alliance Assurances with 3.5%. Two mutual insurers also have operations in the non-life segment: Caisse Nationale de Mutualité Agricole (CNMA) and Mutuelle Assurance Algérienne des Travailleurs de l’Education et de la Culture.

In the life segment, seven competitors generated total revenues of AD8.5bn (€78.2m) in 2014, or 6.8% of the total insurance market. Most of these were life-focused subsidiaries created by established insurers around 2011, when a five-year grace period expired and general risk firms were no longer permitted to offer life insurance products. These include privately held Cardif (a subsidiary of bank BNP Paribas El Djazair), CIAR subsidiary Macir Vie, and Axa Vie, one of two local affiliates of the French insurance giant Axa. Public insurers also operate subsidiaries in the life segment, including CAAR’s CAARAMA, CAAT’s Taamine Life Algérie, and SAA’s Amana. CNMA maintains a mutual life affiliate, Le Mutualiste. In February 2015, Compagnie d’Assurance des Hydrocarbures, the insurance affiliate of state oil producer Sonatrach, partnered with government-owned Banque Nationale D’ Algerie bank and Kuwait’s Gulf Insurance Company to create Algerian Gulf Life Insurance Company (AGLIC), the industry’s newest entrant.

Niche Players

Two specialist firms also operate in important niches: Compagnie Algérienne d’ Assurance de Garantie des Exportations provides credit insurance and Société de Garantie de Crédit Immobilier offers mortgage insurance. A state-backed reinsurer, Compagnie Centrale de Ré assurance (CCR), is active internationally and has also seen a major growth in domestic business since the enactment of a 2010 regulation obliging national insurers to reinsure at least 50% of their portfolios through CCR. With AGLIC’s entry, the market now counts 11 insurers with majority-state ownership, 10 private firms and three mutuals. Private firms were first authorised in 1995, and have been increasing their market share since that time. In 2014, the public-sector firms accounted for slightly more than 62% share of the total insurance market.

Oversight & Regulation

The finance ministry’s Insurance Supervision Commission ( Commission de Supervision des Assurances, CSA) has overseen the insurance sector since its creation in 2008, and has responsibility for authorising insurers, reinsurers and brokers. It consults with the CNA in developing regulations.

In 2015, sector operators called for reforms to requirements for opening agencies and restrictions on bancassurance policies. Alliance Assurances CEO Hassen Khelifati has called for regulations to be relaxed to allow notaries, travel agents or real estate agents to sell certain types of insurance. Others proposed that more types of coverage – including on transport, shipping and construction – be made obligatory, adding to existing obligations for natural catastrophe coverage on property, liability coverage on food producers and other basic protections. But Chérif Benhabiles, director-general of CNMA, said that obstacles to the sector’s growth do not lie with regulation, “The regulatory obstacles have been removed. The problem now is a lack of vision in management. It’s not the state’s job to build the sector. They are there to protect the consumer. We need to do our jobs.”

As public budgets began to show the effects in 2015 of the sharp drop in oil prices, finance minister Abderrahmane Benkhelfa called for insurers to invest more of their earnings in growing the national economy. Already, among a series of solvency safeguards introduced since the sector was opened to private operators two decades ago, insurers are compelled by law to hold 50% of reserve funds in Treasury bills.

Sector Growth

The industry’s 2014 revenues represented a 9.7% increase from 2013, according to CNA figures, a dip from the 12.9% year-on-year (y-o-y) growth reported the previous year. The first half of 2015 witnessed an increase in premiums of 6.5% as compared to the same period in 2014, helped by strong gains in agriculture (16.4%), credit (11.2%) and life (30.4%) premiums, according to preliminary CNA figures. Auto premiums showed a modest 2.7% y-o-y growth, maintaining their claim to slightly more than half of sector-wide insurance revenues. Transport premiums slid 14.3% compared to the same period in 2014.

A review of industry profits in the local press, citing finance ministry sources, listed SAA as the sector’s biggest earner in 2014, with over AD3bn (€27.6m) in gains, followed far behind by fellow state-owned firms CAAT and CAAR. CIAR and Alliance reportedly led the private sector insurers, with profits totalling roughly one tenth of industry leader SAA. Industry-wide profits were reported to come in at nearly AD12bn (€110.4m) for 2014.

“We were an AD19.5bn (€179.4m) industry in 1999, and a more than AD120bn (€1.1bn) industry by 2014. There wasn’t even a slowdown due to the global financial crisis,” Brahim Djamel Kassali, CEO of CAAR and president of the Algerian Union of Insurance and Reinsurance Companies (Union Algérienne des Sociétés d’Assurance et de Ré assurance, UAR), told OBG.


Sector profits have been strong enough to attract new entrants to the market. In addition to the authorisation of AGLIC, 2015 saw Kuwait’s Gulf Insurance Group purchase a 40% stake in L’Algérienne des Assurances. Furthermore, Dubai-based Orient Insurance group was reported to be exploring an expansion into the Algerian market earlier in the year. In December 2014, 16 new foreign reinsurance brokers were authorised by the regulators. Hailing from the UK, France, Spain, Lebanon, the US and India, these firms joined 10 others already authorised by the CSA in 2013 to underwrite reinsurance contracts.

Market Penetration

Solid premium growth in recent years has brought Algeria into the top 10 insurance markets in Africa, although it represents just 0.03% of the global insurance market and 1.74% of the African market.

Insurance density and penetration remain low in light of the economy’s size. Swiss Re listed overall premiums per capita in 2014 at $40, of which $3 was for the life segment and $37 was for non-life. That density placed Algeria at 80th position worldwide, while neighbouring Morocco ranked 68th with density of $102 per capita, and Tunisia came in 71st at $80 per capita. As a percentage of GDP, insurance penetration in Algeria stood at 0.7% in 2014, compared to 3.2% in Morocco and 1.8% in Tunisia. However these measures fail to capture the insurance industry’s contributions, said Kassali. “They are indicators, but they do not represent everything. We have paid out some AD5bn (€46m) over the last 15 years, including AD45m (€414,000) per year in auto claims alone, so we are a major force in stabilising the economy.”

Nevertheless, there is broad agreement that the industry could play a greater role, and UAR hopes to facilitate that transition and modernise the sector. In 2015, it began efforts under a new three-year action plan to improve industry-wide collaboration, review industry regulations, propose changes to policymakers and combat fraud by establishing a national automobile registry, among other measures. Public communication will be an additional priority, aiming to expand the industry’s client base by increasing understanding among business owners and the public about the value of insurance. Kassali told OBG that UAR anticipates launching a public awareness campaign to this effect in 2016.

Life Segment

With AD6bn (€55.2m) in premiums in the first half of 2015, the life segment reached 8.8% of sector market share for the period, compared to 7.1% for the same period in 2014. This expansion continues the segment’s trend of steady growth since market share bottomed out at 6.5% in 2012, after a 2011 legal change obliged insurers to segregate their life and non-life activities. Group coverage has contributed 34% of premiums in the first half of 2015, followed by death coverage (30.8%), assistance coverage (21.0%) and accident insurance (18.3%). Individual health coverage shrank y-o-y to less than 1% of the segment’s premiums for the same period, but a 63.4% y-o-y growth in group coverage premiums suggests that the low uptake in individual coverage is likely explained by greater uptake under group arrangements. Operators in the segment have struggled, however, to overcome the limited appeal of health insurance products in the face of heavy state spending on socialised health care and social security.

After launching new bancassurance products in late 2014, in the fourth quarter of 2015 life segment leader CAARAMA unveiled several new offerings, including individual and group accident coverage, group health packages for employees, and options for family and education savings. Industry executives cite health coverage, retirement savings, travel coverage and other niches as strong potential growth areas, in line with trends across the region. Writing in May 2015, CNA permanent secretary Abdelhakim Benbouabdellah called on insurers to continue to expand the range of product offerings in the personal insurance market to place it “at the centre of the insurance sector’s overall development”.

Interest has also grown in sharia-compliant takaful (Islamic insurance) products as a potential driver of growth in recent years, including in the life segment. Salama, the Algerian affiliate of Dubai-based Islamic Arab Insurance Company, piloted these products in the Algerian market. With AD4bn (€36.8m) in annual premiums, its strong sales figures are encouraging others to follow suit. Islamic bank Al Baraka is preparing to roll out a number of takaful life products next year.

Non-Life Segment

In the first half of 2015, non-life premiums grew by 4% y-o-y to AD62.2bn (€572.2m), up from AD59.8bn (€550.2m) for the same period in 2014. Despite this growth, the non-life segment’s relative share of the insurance marketplace contracted slightly, from 92.9% to 91.2%, due to stronger premium growth in the life segment. Non-life claims rose 10% in 2014 to around AD45bn (€414m), and have expanded sharply in the first half of 2015, to AD29.8bn (€274.2m), a 28.1% increase on the same period in 2014. Profit margins for transport insurance have shrunk in recent years amid ballooning claims, worrying industry players and analysts. However, fire and miscellaneous risk, agriculture coverage and the much smaller credit insurance line have showed solid growth.

Yet with AD36.3bn (€334m) in revenues in the first half of 2015, automotive coverage is the backbone of the non-life segment and the industry as a whole, even if profits have seen slower growth in the last year as new challenges have arisen. In an interview with the local press in November 2015, Nacer Sais, president of SAA, blamed the slowdown on a 30% drop in vehicle imports in the past year, coupled with greater household investment in real estate. More recent reports, covering the first 10 months of 2015, put the y-o-y import decrease as high as 35%. At the same time, auto claim pay-outs in the first six months of 2015 were 21% higher than the same period the preceding year. Speaking to local media in November 2015, Khelifati attributed this jump to a 30% increase in the cost of spare parts this year. This increase – largely attributable to the fall in value of the Algerian dinar, as most spare parts are imported – has caused post-accident repair costs to leap. With more cars on the road, a young population and an expanding highway network, accidents are also rising overall. According to press reports citing a recent UAR study, crashes now cause the Algerian economy some AD100bn (€920m) in annual losses.


Intense price competition in the sector and a ceiling on obligatory insurance costs limit insurers’ ability to adapt to these shifts, though operators are attempting to make incremental changes at the margins. These include efforts to create a national vehicle file to identify high-risk profiles and adjust premium charges accordingly; improve service by speeding reimbursement of claims; and diversify offerings through new products like pay-as-you-drive insurance, which calculates cost based upon distance driven, or automotive assistance services. In search of a longer-term solution, the UAR has requested that regulators consider tripling, or at least doubling, the ceiling to allow insurers to stay solvent.

Some insurers are reportedly still struggling to pay a large backload of claims; some 100,000 customers are estimated to be awaiting claims payments for accidents prior to 2010. Failing an increase to the ceiling, some insurance executives say that insurers will have to accept a permanent decrease in auto-coverage premiums and make up the difference through new business elsewhere, likely in serving small and medium enterprises. UAR’s Kassali said of his own firm that, “We have large private clients, including some of the economy’s leaders, so if there is a decrease on one side we can make it up on the other. There is an awareness across the sector of the need to prepare, and everyone is doing so, and trying to have a diverse portfolio they can rely upon.”

Sales Channels

Algeria has one point of sale for insurance for every 28,000 inhabitants, according to CNA figures published in March 2015, but sector operators are expanding their networks while also seeking new channels to reach potential clients and develop new business. Five new insurance brokers were registered in 2015, bringing the market total to 36, according to the CNA. The number of independent agents had also grown to over 1000 nationwide by 2014.


Since its authorisation in 2006, the expansion of bancassurance through partnerships with commercial banks has given insurance players new hope in the market’s growth potential. At year-end 2014, the leading bank, Caisse d’Epargne et de Prevoyance, reported having signed up 185,000 clients for bancassurance policies in the preceding five years through a partnership with Cardif. Nearly half of these were for “borrower insurance” policies that the partners had required of new mortgage holders, an increasingly common practice across the industry and one that could drive further growth, particularly with the much anticipated restart of consumer credit loans. The launch of a postal bank by Algérie Poste, which is currently in the works, could rapidly expand not only the banking network but also that of bancassurance distribution, should the postal service choose to offer insurance products through a future partnership.

Expanding the sector’s network is thought to be essential to its mission of educating potential clients on the advantages of insurance coverage. Developing the physical sales network will require that insurers have the human resources needed to staff new points of sale. The industry only had some 7000 direct employees in 2000 and by 2015 had over 15,000, but further recruitment will be required to keep expansion on pace. Numerous executives have complained about burdensome regulations for opening agencies – including a requirement that a head of agency have five years’ experience in the industry – which they say hinder their ability to expand their networks.

Rural Market

While the insurance market has grown in recent years, it remains highly concentrated in Algiers; CNA figures indicate that over 40% of 2014 premiums came from the capital region, and some more recent reports put the figure at over 50%. Rural areas are particularly under-insured, though that tide may be shifting. In recent years, agriculture mutual CNMA has led strong growth in the agricultural insurance line. Premiums of AD11.3bn (€104m) in 2014, nearly three fourths of which came from insuring farm vehicles and equipment, gave CNMA 78% of the farm insurance market share in 2014, making it the country’s fourth-largest insurer by premium volumes. In a sign of just how lucrative the agricultural market can be, CNMA saw profits rise four-fold in 2014 to AD476.5bn (€4.4bn) after a nearly nine-fold increase the year before. Nevertheless, CNMA’s Benhabiles told OBG, “Altogether we cover only 5-6% of farmers. The potential market is enormous, but we have to raise awareness and also build the confidence of farmers. So we are engaged in a very aggressive campaign of communication and field visits.” The life segment also shows strong growth potential in rural areas; officials from CNMA subsidiary Le Mutualiste told local media that the number of farmers without social security coverage may be as high as 89%.


Algeria’s insurance industry still has a long way to go before it reaches the penetration and density levels of its neighbours, and insurers are working to raise public awareness and make insurance products more widely available. Significant growth in premiums is possible across the sector, with the exception of automotive coverage. Agricultural, life, and assistance coverage are likely to show strong gains in 2016. Tailoring product offerings and expanding outreach to small businesses will also prove lucrative as the state works to funnel spending away from imports and toward local production. As Youcef Benmicia, CEO of CAAT, told OBG, “Insurance can contribute to economic growth, by reducing risks for entrepreneurship and economic activity,” which can be expected to have positive effects across the wider economy.

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The Report: Algeria 2015

Banking & Financial Services chapter from The Report: Algeria 2015

The Report: Algeria 2015

The Report

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