Algeria’s insurance market set for growth, says AM Best report

Investing.com -- A new report from AM Best, a global credit rating agency, suggests that Algeria’s insurance market is ready for growth, expansion, and increased foreign investment. The report, titled "Algeria’s Insurance Market Primed for Growth and Expansion," highlights several factors that distinguish Algeria’s insurance sector from others in the Middle East and North Africa (MENA) region.

The report points to demographic, economic, and regulatory changes in Algeria as potential drivers of growth. This growth is expected despite the market’s recovery from a contraction in premium volumes during the COVID-19 pandemic. The report notes that while Algeria’s insurance penetration rate is currently less than 1% of its gross domestic product (GDP), this is significantly lower than the world average of 6.8%, indicating potential for market growth.

However, AM Best also identifies several obstacles and structural issues that need to be addressed for further market development. The lack of a risk-based solvency framework is a major issue, as it prevents effective monitoring of the diverse risks that insurers face as they expand their business. Additionally, the cultural perception of insurance in Algeria is still negative, with many people viewing it as an additional form of taxation.

The report suggests that these challenges, if properly addressed, could pave the way for significant growth and expansion in Algeria’s insurance market. It also emphasizes the potential for foreign investment and profitability in the sector. It is clear that Algeria’s insurance market has the potential to grow and expand, but it will require careful management and the right regulatory changes to realize this potential.

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