Similar to other economic sectors in Algeria, the insurance sector is feeling the impact of the COVID-19 pandemic.
After recording a 5% growth in production during 2019, the results for insurance companies for 1Q2020 show a drop in turnover compared to FY2019, said the Algerian Union of Insurance and Reinsurance Companies (UAR) in a statement.
The slowdown in economic activity has had an impact on almost all classes of insurance, with a more significant reduction in lines such as motor, transport, industrial risks and travel insurance, said the UAR.
This situation is further exacerbated by the profound decline in road and maritime traffic, the almost complete grounding of air traffic and the unprecedented decrease in the activity of many companies.
The UAR said lessons must therefore be learned from the experience of the COVID-19 pandemic. Apart from complementary health insurance contracts which provide cover, commercial physical damage insurance does not cover the cost or financial loss incurred as a result of an epidemic. Business interruption (BI) due to a cessation of activity is only covered in the event of material damage (eg, fire, water damage, machinery breakdown, etc).
It is against this backdrop that international insurers and reinsurers are considering innovating a type of cover linked to epidemics and pandemics, on the basis of an actuarial pricing model taking into account the characteristics of a pandemic, said the UAR.
The Algerian insurance market is also adopting this approach and is preparing to launch a feasibility study into a specific mechanism to offer coverage of economic losses including operating losses (BI) in the event of a pandemic, similar to what is available for Nat CAT, said the UAR.
The union added that the Algerian insurance market has been fully engaged in ensuring business continuity and support of their insured parties on a daily basis during this exceptional period, while practising all the sanitary measures recommended by the public authorities to protect employees and customers.
Source Middle East insurance Review
