The value of recently-launched rail projects that are to be insured exceeds DZD400bn ($3bn), indicated the president of the Algerian Union of Insurance and Reinsurance Companies (UAR), Mr Youcef Benmicia.
Speaking to Insurance Review, a magazine published by the National Insurance Council (CNA), he said that these projects involve several parties and are carried out in several phases that impact the structure of the insurance coverage. These phases include a study, the transport of materials, equipment, and other machinery and installations, as well as storage, civil engineering construction, civil engineering works, assembly, and installation of equipment.
"Covering this type of project often requires a good risk assessment and the means to carry out monitoring and site visits to improve underwriting conditions," Mr Benmicia said.
Regarding major projects in the mining sector, the official said that the coverage of these projects requires the mobilisation of significant financial capacities. Sometimes, the projects present a certain level of complexity, and recourse to risk sharing mechanisms such as reinsurance, co-insurance, or co-reinsurance pools.
In this context, Mr. Benmicia indicated that for national insurers that cover these projects, the use of reinsurance, including international, is "essential", stressing that "a co-insurance approach has been put in place by national insurers for certain projects", to optimise national retention capacity, limiting recourse to the international reinsurance market, and thus reducing the outflow of foreign currency abroad.
Asked about the share of construction and engineering risk insurance in Algeria, the official stressed that the annual volume of premiums is around DZD10bn, and that the branch represents a share of around 7.5% of the property and casualty insurance market as a whole.
The UAR chairman predicts growth in the construction insurance branch over the coming years, thanks to the acceleration of investments, particularly in the construction and rail sectors.