Despite rising interest rates, the Moroccan insurance sector managed to maintain its growth in 2023, albeit at a slower pace, according to the Committee for Coordination and Monitoring of Systemic Risks (CCSRS).
The sector’s revenue saw a modest increase of 3.9%, reaching 55.9 billion dirhams (MMDH) by the end of 2023, driven primarily by a 5.8% growth in the non-life segment, as reported by Bank Al-Maghrib (BAM) in a statement following the CCSRS’s 19th meeting in Rabat.
Growth in the life insurance segment, particularly hindered by the savings segment, decelerated significantly to 1.8%, compared to an average of 11.9% over the past decade, according to the same source.
In terms of profitability, the insurance sector achieved a net income of 4.2 MMDH, up 6.2%, increasing the return on equity (ROE) to 9.6%.
The ratio of unrealized capital gains on investments improved to 9.3%, reflecting a stock market recovery, positively impacting the sector’s solvency margin, which reached 330.4%, up from 312.7% a year earlier.
This margin, calculated under the current prudential regime, remains above the regulatory threshold but only covers underwriting risk at this stage.
Additionally, the CCSRS highlights that stress test exercises indicate the overall resilience of insurance companies to unfavorable macroeconomic and technical conditions.
Regarding the pension sector, the main basic schemes continue to face financial difficulties. The CCSRS notes that recent salary resolutions from the social dialogue on April 29, 2024, could slightly delay the depletion of reserves for the Civil Pensions Scheme of the Moroccan Pension Fund (CMR-RPC) and the Collective Retirement Allowance Scheme (RCAR), but do not guarantee long-term viability.
For the General Scheme of the National Social Security Fund (CNSS), reducing the minimum contribution period for pension eligibility from 3,240 to 1,320 days will accelerate the onset of the scheme’s overall deficit and the exhaustion of its reserves by several years.
Thus, the CCSRS deemed the implementation of systemic reform in this sector, through the establishment of a dual-pole system (one public and one private), essential. The strategic directions of this reform were also agreed upon in the aforementioned social dialogue agreement.
According to the same source, this reform should enable the implementation of a pricing system for these schemes that can address a significant portion of their uncovered past liabilities.
During this meeting, the Committee reviewed and approved the financial stability report for 2023 and assessed the progress of the financial stability roadmap covering the 2022-2024 period.
The Committee also examined the conclusions of its monthly subcommittee’s work and the results of the systemic risk assessment, noting that monitoring indicators continue to demonstrate the solidity and resilience of the Moroccan financial sector.
