(Ecofin Agency) - In 2018, claim cost was still one of the factors that negatively affected the financial performances of Moroccan insurance companies listed on the Casablanca stock exchange. By the way, Wafa Assurance and Saham Assurance that are the two most important in this market were strongly affected. Their respective shares lost 20.8% and 23.3% on the market and they indicated that claim costs were the reason their net profit decreased in 2018.
According to figures published by the insurance and social security regulator, the volume of short-rate cancellations at the end of Q4, 2018 was MAD10.2 billion, up by 9.3% on a year to year basis. At the same time, prepaid expenses and benefits shrunk by 3.9%.
Though it is not listed on the Casablanca stock exchange, Royale Marocaine d'Assurance (RMA) is an investor in this market and was affected by the performance of the country’s insurance market. In its financial report, Zouhair Bensaid, its managing director, explained the reason for these high claim costs.
According to the executive, this is because of unrestricted competition. "For some years now, there has been a temptation to increase market shares as a result of the development of some firms that were in transitory form. So, it became crucial for companies to make important turnovers," Bensaid explained in a video posted on Leboursier.ma.
He added that instead of attracting clients via advertisements, some insurers used the price bait.
"Unfortunately, this somehow discredited the system because even the agents get used to it and no matter how bad their portfolio’s claim costs are, they prefer to seek better prices," the managing director continued.
Some discussions with specialized Moroccan journalists shed light on a different aspect of the high claim cost. They indicated that because of these war prices, there has been slackness in respect to the driver’s code of conduct.
Let’s note that the Moroccan insurance sector has taken some measures ranging from the reduction of free services to the fight against car insurance frauds that increase claim costs by 40%.