Morocco: Insurance sector mulls solution to received premiums owed by intermediaries
Source: Middle East Insurance Review | Aug 2023
The issue of the collection of premiums received by intermediaries but not forwarded to insurance companies is being debated, with such outstanding debts exceeding MAD3bn ($312.6m) to date.
To resolve this, a direct premium collection solution is being studied and could be unveiled by 2024, according to Weekly Finance News.
The relationship between insurance intermediaries and insurance companies is marked by a chronic problem that has persisted for years: the collection of receivables related to automobile insurance policies from brokers.
Before 2016, there was some legal ambiguity surrounding premium collection, which allowed intermediaries to collect or remit payments as they saw fit. However, a circular issued by the authorities in 2016 established that the intermediary, in the case of motor insurance policies, is fully responsible for collecting premiums and transferring them to the insurer. But pre-2016 practices die hard and intermediaries continued to hold onto premiums received without repaying insurers.
The cumulative balance of unremitted premiums has grown to an estimated MAD3.4bn, a sum which represents 6% to 8% of the insurance sector’s overall turnover. Of this total, MAD130-150m date back to before 2016, indicating that most of the arrears were chalked up recently.
The Insurance and Social Welfare Supervisory Authority (ACAPS) acting president Othman El Alamy said that the situation had improved in the past three years. The arrears stood at MAD5bn in 2020 and fell to the current total of MAD3.4bn in 2022.
He said, “This situation is the result of a sustained effort made by all the parties concerned and insurance intermediaries.”
ACAPS and insurance companies have started discussing a solution that would allow the direct payment of premiums to the insurer and real-time repayment of commissions to intermediaries, leveraging digital technology. M