Competition Council: Morocco’s Insurance Market Is ‘Highly Concentrated’

Rabat – Morocco’s insurance market is highly concentrated and has relatively high entry barriers that restrict access to double insurance services, the Competition Council argues in a new report.

Published today, the report indicates that since the market’s inception in 2001, the number of insurance providers in Morocco went from 19 in 2001 to 22 in 2021, and rose at an exceptional rate to 26 in 2022 due to the debut of takaful insurance – insurance institutions that are part of Islamic banking.

Basing part of its assessment on the growth rate in the number of insurance companies, the council concludes that the dynamics of entry and exit from the Moroccan market remain extremely limited and highly concentrated.

The low number of insurance companies is attributed to legal barriers hindering the entry of new competitors into the market and the development of favorable conditions to provide an environment for free competition.

The report especially sheds light on the minimum social or founding capital requirement, which stands at MAD 50 million ($5 million). The council sees the capital requirement as constituting a barrier preventing the entry of small and medium-sized companies, especially emerging companies, into the market, which seek to specialize in specific products or introduce innovative products to the market that do not require a significant financial base.

On the list of irregularities in the insurance market, the council also singles out the ambiguity of the timeframe required to obtain accreditation for new companies.

“It is important to note that the legal and regulatory framework governing the insurance sector does not specify a legal timeframe within which the Insurance Regulatory Authority and the Social Security Authority must respond to accreditation requests submitted by insurance and reinsurance entities for conducting their activities,” the report says.

“The absence of this requirement at the legal level acts as a barrier to market access for investors who require visibility, transparency, and legal clarity regarding the accreditation process,” it continues.

‘Traditional’ insurance product offerings

Insurance offerings in Morocco primarily focus on traditional products. Market offerings do not meet the demands of specific segments of the population, especially when it comes to providing comprehensive and innovative insurance products.

While the national insurance market has shown considerable progress in terms of penetration rates and issued premiums, there remains significant untapped potential that could position Morocco as a leader within Africa and the Arab world.

One untapped area the report singles out is the targeting of underserved segments. In particular, the report calls on insurance companies to include “comprehensive insurance” services, defined as “a category of insurance products primarily aimed at low-income populations.”

According to the report, the purpose of such products would be “to ensure risks such as accidents, illnesses, death, and others, in exchange for affordable premiums available to the targeted population through simplified subscription, management, and compensation contracts.”

Currently, traditional insurance products marketed by insurance and reinsurance companies in Morocco do not meet the specific needs of certain segments, especially in microinsurance – a type of low-cost insurance designed for low-income individuals and families in developing nations.