July 29 2008
The legal framework for insurance in Algeria is mainly set out in Ordinance 95-07 of January 25 1995, modified by Law 06-04 on February 20 2006, and by the Finance Act. However, the system is in transition as a result of the recent introduction of bancassurance and the relaxation of the regime for foreign insurance. An influx of new products and companies is eagerly awaited. This Overview offers an interpretation of certain key concepts in Algerian insurance law for companies which may be considering entering the market.
The term 'insurance' is defined in the ordinance as a contract by which the insurer, in exchange for payment, is required to provide the insured (or a third-party beneficiary for whose benefit the insurance is acquired) with a sum of money, revenue or other pecuniary service on the occurrence of a risk event covered by the contract. Such service can also be provided in kind for insurance assistance and for motorized land vehicles. Other key concepts can be explained as follows:
Insurance activity is carried on by reinsurance and/or insurance companies and by insurance intermediaries (agents), experts and commissioners of damages.
A distinction within insurance and reinsurance companies can be drawn between: (i) companies that agree to contractual commitments whose execution relates to an individual's lifespan, health and physical integrity, and to capitalization and assistance; and (ii) all other kinds of insurance companies.
Reinsurance and insurance companies can carry on their activities only once they have applied for and obtained authorization from the Ministry of Finance. Such companies may not carry on activities for which they are not registered. Approval must be sought in the event of:
The approval must indicate the insurance operation(s) that the companies are authorized to undertake.
A foreign insurance company wishing to open a branch or representative office in Algeria must apply to the minister of finance for prior authorization, which will be granted if the application is duly completed and the foreign company's home state offers reciprocal arrangements to Algerian companies. The authorization applies to activities in support of the parent company’s existing activities to establish business relationships between economic operators and insurance or reinsurance companies. All direct commercial activities are excluded. Initial permission is granted for three years and may be renewed.
Algerian residents and property or objects of risk which are registered and located in Algeria can be insured only by registered insurance companies.
Intermediaries, experts and commissioners of damage
The term 'insurance intermediaries' covers: (i) 'general insurance agents', defined as natural persons representing one or more insurance companies under a contract of appointment; and (ii) 'insurance brokers', defined as natural or legal persons acting as intermediaries between policyholders and insurance companies in order to execute insurance contracts. An insurance broker is the insured's agent and is accountable to the insured.
Insurance companies can distribute insurance products through banks, financial institutions and other equivalent distribution networks.
An insurance expert is a service provider empowered to investigate the cause, nature and extent of damages and the evaluation of such factors, and to verify the insurance guarantee, if appropriate.
A commissioner of damages is a service provider empowered to (i) record and establish the cause of damages and losses incurred to insured ships and merchandise, and (ii) recommend precautionary measures for the prevention of damage.
An actuary carries out economic, financial and statistical studies to develop or modify insurance contracts, assessing risks and costs for the insurers and the insured and setting the levels of the insured's contributions to ensure the profitability of the company. The actuary monitors the company's operating results and financial reserves.
An insurance company is required to grant coverage for any risk submitted for compulsory insurance in respect of insurance operations for which the company is registered. An insurance contract signed by a person liable for compulsory insurance must include guarantees which are at least equivalent to those contained in model clauses.
Forms of compulsory insurance include the following:
Ships registered in Algeria must be insured by companies registered in Algeria for damages they may incur, as well as for third-party claims.
Marine transportation companies must be insured by insurance companies registered in Algeria in respect of civil liabilities with regard to transported persons and goods, as well as third-party claims.
Importers wishing to insure goods and materials transported by sea must take out insurance with an insurance company registered in Algeria.
Registered aircraft in Algeria must be insured by an insurance company registered in Algeria for damages they may incur. Airlines must be insured by an insurance company registered in Algeria in respect of their civil liability for transported persons, goods and others.
Importers wishing to insure goods and material transported by air must take out insurance with a company registered in Algeria. However, imported goods or materials which benefit from specific financing are not subject to such compulsory insurance.
Aircraft operators registered in Algeria and charterers must be insured by a company registered in Algeria for their civil liability to third parties while their aircraft are on the ground.
For further information on this topic please contact Amine Ghellal or Nabila Benouniche at Ghellal & Mekerba by telephone (+213 21 60 08 13) or by fax (+213 21 60 08 12) or by email (firstname.lastname@example.org or email@example.com).
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