Work in progress: Young residents and low penetration set the foundation for future growth


Welcoming only a few new entrants to the market, the structure of Algeria’s insurance sector has remained relatively stable in recent years, with the four largest state-run insurers continuing to dominate. Purely private sector insurers capture less than one-quarter of the market, despite making modest gains of late. While the life insurance segment accounts for just 10% of total premiums, its growth has been outperforming the non-life segment – a trend that looks set to continue.

The dominant driver of activity in the insurance sector is wider macroeconomic performance. This can be seen most clearly in the stagnation of insurance premiums during 2015-16, and the slight reversal witnessed in early 2017, after a decade of double-digit growth. Given that inflation has been in the mid-single digits since 2015, the recent performance is even weaker when adjusted for price fluctuations, significantly lagging behind GDP growth. Low penetration rates offer significant potential for growth, but also highlight challenges facing local underwriters. “Unlike in other countries, Algeria’s insurance culture is not very developed. There is not a lot of product innovation, and people are often not aware of the products that are available,” Noureddine Tirichine, director of marketing and development at Trust Assurances, told OBG.


Algeria’s population increased at a relatively rapid rate of 1.9% per annum over the 2010-15 period, surpassing 40m for the first time in 2016. The country has a young population, with an estimated median age of 27.8, which bodes well for future economic growth as the labour force expands. The youth dependency ratio was 43.6 per 100 people in 2015, compared to an elderly dependency ratio of just 9.1. This highlights a potential growth area for the life insurance segment in the long term as the population begins to age, albeit at a slower pace than the most developed insurance markets. The economy is expected to grow more slowly than the population during the 2017-18 period, according to the latest IMF forecasts, meaning that per capita incomes will decline, undermining near-term prospects for a return to premium expansion.


In nominal terms, premiums have grown modestly in recent years, posting 2% increases in both 2015 and 2016 to reach AD133.9bn (€1.1bn) by the end of this period. The advancement marks a slowdown from the average annual growth rate of 12% in the 10 years between 2005 and 2015.

Accounting for 89.2% of premiums, the non-life segment saw particularly weak growth in 2016, rising only 0.6% to AD119.4bn (€990.4m). Meanwhile, life insurance – which accounted for 8.6% of premiums – had a relatively strong year, recording an 11.8% increase – almost twice the rate of inflation for the period – to hit AD11.5bn (€95.4m). Although small by comparison, the international acceptances segment that represents 2.2% of premiums experienced significant growth of 35.2% to reach AD2.9bn (€24.1m).

Macroeconomic weakness in the first six months of 2017 fed through to a decline in premiums, which slid 3.2% to AD69.9bn (€579.8m) in the first half of the year compared to the same period of 2016. A fall of 4% was recorded in non-life premiums to AD61.6bn (€510.9m) – accounting for 88.1% of the total – but a 0.3% increase showed in life premiums, which represented 9.7% of the market, to bring the segment to AD6.7bn (€55.6m). The remaining 2.2% of the market belonged to international acceptances.

Non-Life Lines 

Auto insurance has traditionally been the dominant segment in Algeria, making up over half (54.6%) of all insurance premiums in 2016, down 1.4% to AD65.3bn (€541.6m) for the year. Almost one-fifth of this is accounted for by risks that are obligatory to cover, with those lines showing modest premium growth of 0.3%. The overall decline in auto insurance was therefore driven by the 1.8% decrease in non-obligatory risks, which made up the remaining four-fifths of premiums, as consumers began to drop discretionary cover in light of the challenging economic environment.

Reduced automobile supply coming into the country, and thus lower vehicle sales, has also played a part in dampening the segment, as imports have fallen since the 2015 implementation of enhanced safety standards. “Restrictions on automobile imports have had a knock-on effect on the auto insurance and road transport segments, as there has been a slowdown in the increase in the number of vehicles to insure,” Rachid Sekak, senior consultant at BRS Consultants, told OBG.

The second-largest non-life segment, insurance for fire and other property risks, accounted for more than one-third (35.5%) of premiums in 2016 and posted a modest gain of 1.3% for the year, reaching AD42.5bn ($352.5m). This was driven by strong performance in the largest subcategory – insurance against fire, explosions and natural disasters – which advanced 10.5%. Still, the segment has underperformed expectations as economic headwinds have taken their toll on investment in infrastructure and civil engineering projects.

The non-life category comprises three other, smaller segments: transport insurance, which accounted for 5.8% of all premiums in 2016 and posted a 21.3% gain on the year to reach AD6.9bn (€57.2m); agricultural insurance, which slipped 10.3% to AD3.4bn (€28.2m) and contributed 2.8% of total premiums; and credit insurance, which was the strongest – albeit smallest – subsegment, posting gains of 23.9% to reach AD1.4bn (€11.6m) for the year and 1.2% of the total.

In the first half of 2017 auto insurance posted a 3.8% year-on-year (y-o-y) decline to AD34.5bn (€286.2m), with a similar 2.2% drop in property to AD22.4bn (€185.8m). Falls were more pronounced in transport (16.9%) and agricultural (27.3%) coverage to record premiums of AD2.3bn (€19.1m) and AD1.4bn (€11.6m), respectively. Credit bucked the trend by posting an increase of 38.7% compared to the first half of 2016, realising AD920m (€7.6m) in premiums.

Penetration & Density 

Prior to 2010 insurance penetration experienced several years of strong progress, albeit from a low base, increasing from 0.55% of GDP in 2006 to 0.76% in 2009. By 2011 it had fallen back to 0.6% before beginning a modest recovery. According to insurance giant Swiss Re, penetration reached 0.8% of GDP by 2016, on par with Angola, but less than half the 1.97% rate seen in Tunisia and less than a quarter of the 3.48% share in Morocco. Moreover, with inflation-adjusted premiums lagging behind real GDP growth since 2015 – a trend likely to continue at least through 2017 – the medium-term outlook does not suggest that Algeria will soon close the penetration gap with its regional neighbours. Nonetheless, the authorities are optimistic, estimating that penetration could reach 0.96% of GDP in 2018 and 1.06% in the event that a new legal regime for takaful (Islamic insurance) is successfully introduced. Insurance density, or premiums per capita, stood at $30 in 2016, on par with Angola’s $30.50, but behind Tunisia’s figure of $72.50 and Morocco’s $102. These, in turn, are small fractions of continental leader South Africa, at $763.

Sector Structure 

According to the National Insurance Council (Conseil National des Assurances, CNA), state-run insurance firms dominated the sector in 2016, with private providers holding a 23.3% share of the non-life market and 29.4% of the life segment.

Of the life insurance categories, the health insurance subsegment is the smallest in absolute terms, accounting for only AD48.4m (€401,000) in premiums in June 2017. However, it had the strongest private sector presence at 61.2%. Private underwriters are also reasonably well represented in the life and death segment, where they held 37.7% of the AD2.3bn (€19m) market.

In the AD1.4bn (€11.6m) assistance segment, the private sector had a 30.3% share, while it held a 28.2% share in the AD910m (€7.5m) accident insurance sub-segment. The private sector was more weakly represented in the AD2.1bn (€17.4m) collective policy segment at mid year, with an 8.4% market share.

In non-life coverage at June 2017, private sector presence was strongest in auto insurance, where it held 31.4% of the AD34.5bn (€286.2m) market, and weakest in the smaller non-life segments of credit, with 0.6% of AD920m (€7.6m), and agricultural insurance, with 7.4% of AD1.4bn (€11.6m). Private companies held a 19.4% share of the AD2.3bn (€19.1m) transport coverage total, and 16.5% of the AD22.4bn (€185.8m) property risk category. “We expect to see a similar trend through the second half of 2017, but the outlook for 2018 is dependent on the oil price and broader economic trends,” Tirichine told OBG.

Industry Players 

According to figures provided by the Ministry of Finance (MoF) in 2015 – the latest year for which a breakdown by firm is available – four non-life insurance companies recorded premium income greater than AD10bn (€82.9m), two businesses recorded income between AD5bn and AD10bn (€41.5m-82.9m), and the remaining seven took in less than AD5bn (€41.5m) over the year.

Leading the segment with a 23.3% share of non-life activity was Société Algérienne d’Assurances (SAA), with premiums of AD27.4bn (€227.3m) in 2015. It was followed in second place by Compagnie Algérienne des Assurances (CAAT), with AD21.2bn (€175.8m) and an 18% market share. In third and fourth place were Compagnie Algérienne d’Assurance et de Réassurance (CAAR) and Caisse Nationale de Mutualité Agricole (CNMA), respectively, which recorded premiums of AD16.6bn (€137.7m) and AD12.5bn (€103.7m), giving them 14.1% and 10.6% shares of the non-life segment. These four – totalling 66% of the non-life market – are all state-owned and have long dominated the sector.

Coming in next were Compagnie Algérienne des Assurances dans le Secteur des Hydrocarbures (CASH) and Compagnie Internationale d’Assurance et de Réassurance (CIAR) in fifth and sixth places, respectively, with premium incomes of AD9.9bn (€82.1m) and AD9.1bn (€75.5m), and market shares of 8.4% and 7.7%. The remaining seven firms active in the market accounted for a total of AD21.1bn (€175m) in sales, or 17.9% of the non-life segment.

The life insurance segment, though smaller at 10% of the industry, enjoys more competitive dynamics, with six of the eight participants holding roughly similar market shares. Having seen its premium income advance 37% during 2015, TALA Assurances – a subsidiary of CAAT – was the largest life assurer in Algeria that year. Its income of AD2.1bn (€17.4m) secured it a 21.2% share of the market. CAARAMA Assurance – a subsidiary of CAAR – retained second place in 2015, though its 16% growth in premium income saw it fall further behind the segment leader, partly due to having lost its business with Sonatrach, the government-owned hydrocarbons company. CAARAMA held a 17.7% share of the life segment, with AD1.8bn (€14.9m) in premium income.

Following were four other life insurers: Cardif El Djazaïr, a subsidiary of France’s BNP Paribas, having 15.5% of the market with AD1.6bn (€13.3m) in sales; Société d’Assurance, de Prévoyance et de Santé, securing 14.7% with sales of AD1.5bn (€12.4m); Macir Vie, a subsidiary of CIAR, having a 13.5% share with sales of AD1.4bn (€11.6m); and AXA Assurances Algérie Vie, with 12.8% of the market and AD1.3bn (€10.8m) in sales.

There are two additional smaller life insurers, Le Mutualiste – a subsidiary of CNMA – and Algerian Gulf Life Insurance Company (AGLIC), which registered a combined AD467m (€3.9m) in premium income in 2015.


The sector has been relatively stable in terms of participants in recent years, partly as a result of reticence among potential foreign entrants since the authorities reinstated the 49% maximum foreign ownership provision in 2009. Although this restriction was relaxed in 2017, it was maintained for the strategically important energy and financial sectors. Over the longer term, a removal of this restriction would make Algeria an attractive entry opportunity, given the significant scope for organic growth as demonstrated by existing low penetration levels. The most recent new player arrived in 2015: AGLIC, a joint venture between Gulf Insurance Group of Kuwait, CASH and Banque Nationale d’Algérie, trading as L’Algérienne Vie.


Algerian insurance firms invested heavily in expanding their branch networks in the decade to 2015, with the total number of outposts increasing from 1230 to 2223 over the period. Bancassurers accounted for a further 750 sales points based in bank branches. The number of insurance brokers almost doubled from 20 to 38 in the 10 years to 2015, although only 28 of these were deemed active that year.

Together with relatively robust economic growth, this expanded footprint was a key driver of double-digit increases in premiums until 2014. According to the MoF, 71% of premiums were generated directly through underwriters in 2015, with the remaining 29% generated by brokers and other intermediaries. There are a number of different business models, however, with some insurers relying on intermediaries to generate two-thirds or more of their business – CIAR, for example, derived 91% of its sales from intermediaries in 2015 – while others hardly use them at all. The largest insurer that does not work through intermediaries is CNMA.


Insurers saw a significant improvement in claims payable during 2016, falling 11.9% to AD62.4bn (€517.6m). The vast majority of these – 96% – were accounted for by claims in the non-life segment, the total of which declined by 12.1% to AD59.9bn (€496.8m), with reductions across all subsegments. This marks a trend reversal over the 2010-15 period, when payouts of claims totalled AD344.5bn (€2.9bn), posting an average annual growth rate of 14.7%.

The new trajectory looked set to continue in 2017, with claims payable falling 32.3% y-o-y in the first six months. However, the current decline is related to a backlog in claims. “Partly due to staff being somewhat overwhelmed and partly because insurers are insufficiently equipped, there is a backlog of about 1.5m unresolved claims,” Sekak told OBG. This situation undermines customers’ confidence in insurance. “There is a need for more pressure to be put on insurers to improve their standards of service and deal with claims in a more timely manner,” he added.

In order to improve capacity to process auto insurance claims, the industry adopted two conventions in 2015. First, the Agreement on Remedies at Average Cost allowed for 78,000 claims dating from the 2010-12 period and amounting to AD3bn (€24.9m) to be processed. The second, the Agreement on Resolving Material Auto Claims, came into effect in June 2016 and has further improved processing times. Nonetheless, more work remains to be done to clear the claims backlog and restore public confidence in the system.

Regulatory Framework

The Insurance Directorate of the MoF is the key sector regulator, responsible for leading reform efforts and preparing legislation. The core of the legal framework governing the sector is Ordinance 95-07 of January 25, 1995, amended and supplemented by Law No. 06-04 of February 20, 2006.

The Basic Law of 1995 opened up the sector, which had been the preserve of a state monopoly, and the 2006 changes mandated the separation of life from non-life lines, and established a legal framework for bancassurance. During 2016 and 2017 the MoF carried out an extensive consultation process with a view to further upgrade the legal framework in order to provide, among other changes, for the mainstreaming of Islamic insurance products.

Also within the ministry and established under the 2006 law is the Insurance Supervision Commission, responsible for licensing insurers and providing ongoing oversight of the sector. The MoF manages two funds, the Automobile Guarantee Fund and the Assured Guarantee Fund, which respectively guarantee to indemnify victims of auto accidents in cases where the person responsible is unknown or uninsured, and clients of insurers in the event that the latter becomes insolvent.

Outside the MoF, sector participants are represented by the Algerian Union of Insurance and Reinsurance Companies (Union Algérienne des Sociétés d’Assurance et de Reassurance, UAR), an industry body, while the CNA acts as an umbrella organisation, bringing together public authorities, insurers, brokers and other players.

Digital Insurance 

As with digital banking, Algeria’s online offering in the insurance sector lags behind developments in its cohort of countries. While the vast majority of firms have a website with basic information about the company and the products they offer, there is wide scope for greater interactivity.

In the current landscape, the websites of sector players SAA, CAAT, CAAR and AXA Assurances allow prospective clients to obtain quotes for various products, with Alliance Assurances allowing customers to declare an auto accident in addition to offering online quotes for six of its products. Some insurers are represented on social media, while others make use of SMS messages to advise clients of the impending expiry of their policy or the payment of claims.

E-payments were launched in Algeria in late 2016, with the life assurer Amana – a subsidiary of SAA and French-owned MACIF Assurances – among the first participating companies. As the system is rolled out nationwide, more insurance firms can be expected to allow their clients to pay electronically with bank cards.


Despite its largely Muslim population, Islamic insurance products are still very much in their infancy in Algeria; only one insurer, Salama Assurances, currently offers them. Having operated in the country since 2000, the Dubai-based insurer increased its market share in 2016, and its 6% growth in sales outperformed the industry average. Even as the sector as a whole is experiencing a challenging period, Salama is predicting another strong year in 2017 following the launch of its family insurance and index-linked agricultural products.

The CNA has been working closely with relevant ministries, as well as industry participants and external experts, to prepare a feasibility study on the wider introduction of takaful. The study will likely address the legal, technical, organisational, economic and social aspects of sharia-compliant products. Covering both the life and non-life segments, the new regime foresees takaful specialists like Salama, as well as conventional insurers, offering both classic and Islamic products – similar to the Islamic windows opened by many of the country’s banks in recent years.

In practise, the authorities have announced their intention to amend the existing Insurance Law. It is recognised that new Islamic accounting standards and Islamic financial assets, such as sukuk (Islamic bonds), will need to be introduced to the framework to make it a success, while staff across the industry will need to be trained to deal with takaful products.

Speaking to local media in February 2017, Brahim Djamel Kassali, president of the UAR, noted, “Takaful has real potential in our country, but it needs a dedicated legal framework. To this end, one must recognise the steps taken by the MoF to revise the Insurance Law, which will provide an opportunity to integrate – among other things – the basic rules and principles of this type of insurance.” The 2018 Finance Law, which is said to include the first legal framework for takaful, was under debate in the second half of 2017.


Reinsurance enjoyed a more fruitful year in 2016 than other insurance segments, with premiums advancing 7.4% to reach AD27.2bn (€225.6m). Of this figure, AD24.3bn (€201.6m), or some 90%, was generated by domestic reinsurers, with the remaining AD2.9bn (€24.1m) coming from international firms. On the local side, the state-run Compagnie Centrale de Réassurance (CCR) is the monopoly provider.

Nearly half (46.5%) of the reinsurance market relates to fire risk, and with a 15.5% increase for the year, this was the biggest driver of the overall gain. The second-largest reinsurance line is engineering.

Reinsurance continued to outperform the rest of the sector in 2017, with premiums rising 6.9% y-o-y in the first six months, compared to overall insurance premiums declining by 3.2%. Early 2017 saw SAA and CASH sign an agreement governing cooperation and competition for large clients. Among the aims of this initiative – the first such arrangement in Algeria – is for the insurers to share risks through co-assurance and utilise domestic reinsurance capacity to lessen the reliance on international reinsurers.

Financial Performance 

According to the MoF in its latest review of the sector, “Activité des Assurances en Algérie” for 2015, profits totalled AD11.9bn (€98.7m) across the insurance and reinsurance industry that year, essentially flat on 2014, and represented an aggregate gross margin of 7.8% of premiums. Overall costs came to AD33.4bn (€277m), representing 22% of premiums and a 5% increase over 2014. At AD16.9bn (€140.2m), the industry’s 14,855 staff represented more than half (51%) of management costs.

Across the sector, the insurance margin covered general costs at a rate of 127% in 2015, with AXA Assurances, at 69%, the only firm to fall below 100%. The national reinsurance provider, CCR, was the most efficient by far, covering general costs 460% with its insurance margin. Return on equity (ROE) averaged 8% across all direct insurers in 2015, ranging from a loss of 40% at AXA Assurances – the only institution in the red – to 13% at TALA Assurances and Alliance Assurances; CCR recorded an ROE of 12%.

The solvency margin for the industry as a whole, including reassurance, improved by 7% to reach AD141.1bn (€1.2bn), with increases registered in all providers with the exception of MAATEC Assurance, which nonetheless remained the insurer with the most comfortable solvency margin position. In aggregate, this represented 95% of premiums, or five times the regulatory minimum, and 93% of technical provisions, equal to six times the regulatory minimum.


The weak trend in premiums seen in early 2017 is expected to continue, with Hassan Khelifati, CEO of Alliance Insurance, telling local press that total insurance turnover could fall by 8% in 2017. The IMF forecasts 2018 to be another slow year of crafting a sustainable diversification plan. “There is a pressing need to reposition businesses and ease the country’s reliance on hydrocarbons revenue. Oil and gas are non-renewable resources, so Algeria must work to secure its economic position,” Nacer Sais, CEO of SAA, told OBG. Fiscal consolidation is expected to continue to limit infrastructure projects undertaken by the government, in turn limiting new policies being written to cover such activities, and as long as vehicle imports remain restricted, there is likely to be a ceiling on the potential growth of auto and road transport insurance.

Still, favourable demographics and relatively low insurance penetration hold the promise of significant growth potential in the longer term, particularly outside the currently dominant auto insurance line. Given that it is building from a low base, the life segment can be expected to continue to outperform the wider sector as the population begins to age. Greater availability of insurance products and increased use of digital platforms should also underpin future industry growth.


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The Report: Algeria 2017

Financial Services chapter from The Report: Algeria 2017

The Report: Algeria 2017

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