Brahim Djamel Kassali, President, Algerian Union of Insurance and Reinsurance Companies (UAR): Interview

Interview: Brahim Djamel Kassali

What has been the impact of bancassurance on the insurance penetration rate?

BRAHIM DJAMEL KASSALI: Bancassurance is relatively new in Algeria. Bancassurance activities really started in 2010. Overall, 28 distribution agreements were signed by insurance companies with banks. Over five years we have seen a steady increase in sales achieved by this distribution channel, but is not yet significant enough to have an impact on the penetration rate of insurance.

The bancassurance development prospects are very promising, especially with the increasing number of outlets in banks and the expanding range of insurance products on offer to customers.

The number of distribution channels between agencies and direct agents has also risen. There has been an increase from 874 branches in 2000 to 2050 at the end of 2014. This has greatly increased the level of production for the sector from AD19.5bn (€179.4m) in 2000 to AD125.5bn (€1.15bn) in 2014, a growth rate of 525% over the period.

The weight of the insurance sector in the Algerian economy is much more significant than the penetration level of insurance would suggest. Financial investments by the insurance sector amounted to over AD200bn (€1.8bn) at the end of 2014, and claims payments amounted to over AD500bn (€4.6bn) during the period 2000-14. If we add to this the net number of jobs created by the insurance industry during the same period, we can better appreciate the real economic weight of the insurance sector.

Which specific strategies should be devised and implemented to develop life insurance?

KASSALI: Personal insurance has great potential in Algeria. For its development, the government has set up an institutional framework taking into account organisational, legal and tax concerns. Seven new companies dedicated to insurance and health insurance have been created in recent years, which has begun to yield tangible results in terms of increased revenue and profitability. To further develop this branch, the industry should focus on two key aspects: the product offering and sales and marketing force. We are emphasising our efforts on diversification and attractiveness of health insurance products based on customer needs. It is also important to implement marketing strategies supported by a more varied and diverse sales force. This includes the creation of distribution networks adapted to products and target customers. The establishment of bancassurance is the first major milestone in this effort.

How you perceive the development and application of direct policyholder compensation?

KASSALI: The implementation of direct compensation for policyholders is recorded in the strategy of the UAR. This is a very important action because it will simplify the procedures and significantly accelerate automobile claims regulations to better satisfy customers and restore confidence. Restoring trust is fundamental to increasing the sales of insurance in the branches outside of automobile offerings.

What are the prospects for the growth and expansion of takaful (Islamic insurance) products?

KASSALI: The success of takaful products in the Middle East, South-East Asia and, more recently, in Europe demonstrates the viability of this device.

In Algeria, we can say that the takaful insurance is under construction. In the mid-2000s, an Algerian private insurance company was placed on the market for takaful products. However, with the separation of personal insurance from non-life, which occurred in 2011, its development stopped. Market studies and business plans have since been made for the creation of an insurance company dedicated to takaful products. Consequently, the prospects for developing this type of insurance in Algeria are very encouraging.