A June 2013 industry conference organised in Morocco by the Union Générale Arab d’Assurances and Morocco’s Société Centrale de Réassurance, meanwhile, also highlighted takaful’s potential for increasing stock market activity, where insurers already make up some of the largest institutional investors, and encouraging national savings – a worthwhile endeavour given the decline in gross national saving rates from 29% to 24.3% in the two years leading up to 2012.
However, currently Morocco lacks a comprehensive framework for regulating takaful activity, and only limited forms of sharia-compliant finance are allowed. The introduction of an Islamic financial services regulatory code is a priority of the current government, with passage targeted for this year. The draft regulation was originally expected to be approved by 2012 year-end, but discussions have been drawn out. No takaful products are authorised to be offered in Morocco for the time being, although some Islamic banking services have been tentatively introduced. Lenders are allowed to offer a specified range of Islamic financial products alongside conventional ones, although to limited success.
Consensus is growing that distinct distribution channels, with unique regulations, contract structures and fees, are necessary for Islamic financial services to flourish. According to initial press statements by officials from the insurance regulatory agency, the Direction des Assurances et de la Prévoyance Sociale, the new law will encourage existing insurers to create takaful subsidiaries that adhere to the relevant administrative and fund management policies. Statements last year from the government have also outlined foreign shareholding caps of 49% on any new Islamic financial institutions.
The pending passage of the draft law has attracted the interest of foreign investors, particularly Gulf institutions, such as Qatar International Islamic Bank, which have already publicly expressed interest in setting up shop in the kingdom.
Investor interest in Morocco’s potential for Islamic financial services, and takaful specifically, is in part a result of the strong performance of conventional insurance products in recent years. Total premiums, including reinsurance, increased by 8.9% to reach Dh26bn (€2.3bn) in 2012, roughly on par with the 9.2% growth registered in 2011, according to data from the Moroccan Federation of Insurance and Reinsurance Companies.
Life insurance performed particularly well, with premiums rising by 14.5% to reach Dh8.78bn (€763m). Life and savings insurance offer plenty of potential for providers, given that much of Morocco’s population, including self-employed and low-income groups, have inadequate or, in some cases, no cover.
The majority of life insurance premiums came from individual lines, bringing in Dh5.6bn (€486m) in 2012 compared to Dh2bn (€173.7m) for group policies. Bancassurance, as well as other retail channels, should help to propel the market.
While life insurance is growing rapidly, the non-life segment still accounts for the majority of the market, making up about two-thirds of premiums last year. The largest segment is motor coverage, generating Dh8bn (€695m) in premiums, about half of the non-life market. Although roughly the same size as the life segment, motor is growing more slowly, expanding by 6.4% in 2011 and 6.5% in 2012. Smaller areas of the market like fire and credit insurance, however, gave strong performances in 2012, notching up 15% and 10% growth, respectively, although each represents less than 5% of premiums.
Morocco’s insurance industry continues to enjoy a strong regional position as the second-largest market on the continent after South Africa. However, the highly-anticipated introduction of takaful productions should herald a new phase of diversification and broaden the market to include clients as yet uncovered by the conventional system.
Spy Ghana
