Ratings agency Standard & Poor’s (S&P) recently published a report, entitled Long-term growth prospects look good for the Maghreb insurance industry, in which it finds that the insurance sectors in Algeria, Tunisia and Morocco (collectively known as the Maghreb) have ‘favourable growth potential’, in spite of uncertain short-term economic outlooks.
The ratings agency said that its opinion about the region’s insurance market ‘reflects the increasing need for life and health insurance products in those countries as well as some largely underdeveloped personal lines, such as property’. Samira Mensah, a credit analyst with the firm, added: “Mounting needs from the middle class, investment in infrastructure, and regulatory changes to increase insurance penetration constitute the main drivers of our expectations.”
Moderate economic growth is projected in the short term for Algeria and Morocco, both of whose economies are showing positive growth in GDP, with S&P stating its belief that the growth of insurance premiums is likely to outpace regional GDP growth due to low penetration rates. Despite this, S&P predicts ‘hurdles’ over the next few years, including the slow European economic recovery (Europe is the primary trade partner for the Maghreb) and ongoing political tension and economic uncertainty in Tunisia.