VZCZCXYZ0000
PP RUEHWEB

DE RUEHTU #0216/01 0970903
ZNR UUUUU ZZH
P 070903Z APR 09
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 6169
INFO RUCPDOC/USDOC WASHDC PRIORITY
RUCNMGH/MAGHREB COLLECTIVE

UNCLAS TUNIS 000216 
 
SIPDIS 
 
STATE FOR NEA/MAG (HAYES), EEB/CBA (Winstead) 
USDOC FOR ITA/MAC/ONE (MASON), ADVOCACY CTR (TABINE) 
CASABLANCA FOR FCS (ORTIZ) 
 
E.O. 12958: N/A 
TAGS: ECON EIND ETRD EFIN TS
SUBJECT: THE INSURANCE SECTOR IN TUNISIA: Potential Opportunities 
for US Companies 
 
------- 
Summary 
------- 
 
¶1.  This cable provides a comprehensive overview of the insurance 
sector in Tunisia.  Law No. 2008-8, passed by the Tunisian 
Parliament on February 11, 2008, amended the insurance code and 
opened the sector to foreign competition.  This provides 
opportunities for US companies to consider investing in the formerly 
closed Tunisian insurance sector.  Tunisia will be hosting a summit 
for insurance companies in the Middle East/North African region on 
April 28-30, 2009. 
 
End Summary. 
 
----------------------------------------- 
A Sector in the Process of Transformation 
----------------------------------------- 
 
¶2.  The insurance sector in Tunisia suffers from several 
shortcomings:  low penetration in the national economy, low density, 
a modest role in mobilizing savings, and a persistent structural 
deficit for some segments.  These weaknesses need to be overcome in 
the near term to enable the sector to play a full role in an economy 
where markets have to be opened to foreign competition in accordance 
with the commitments made under the WTO and the Tunisia-European 
Union Association Agreement.  The reforms undertaken over the last 
ten years are focused on improving the financial situation of 
insurance companies, updating the legal and regulatory framework, 
development of under-exploited segments (i.e. life insurance, 
agriculture), reform of major insurance schemes, upgrading of 
insurance companies, improving the environment by introducing new 
regulations and the gradual opening of the sector to competition. 
 
--------------------------------------------- - 
Macroeconomic Position of the Insurance Sector 
--------------------------------------------- - 
 
¶3.  The two indicators commonly used to assess the macroeconomic 
position of the sector are the penetration rate and the density of 
insurance.  The penetration rate is the share of the gross domestic 
product (GDP) allocated to the purchase of insurance products. 
According to statistics of the Tunisian Federation of the Insurance 
Companies (FTUSA), the penetration rate grew from 1.95 percent in 
2006 to 1.96 percent in 2007.  This slight increase highlights the 
sector's low performance, which has been 1.9 percent over the last 
three years. 
 
¶4.  Insurance density is defined as the gross premium income in 
percentage of the population.  This indicator calculates the amount 
of money spent on insurance products per inhabitant and per year. 
According to FTUSA statistics, in 2007, the insurance production 
growth rate was 9.6 percent.  This was higher than the total 
population growth rate of 1.18 percent, ergo an increase in the 
insurance density.  Insurance density increased from 79.1 Tunisian 
Dinar (TD) (US$60) per capita in 2006 to 85.7TD (US$67) in 2007, 
mainly due to the increase in auto insurance premiums.  Note:  The 
latest official statistics used throughout this report are for 2007. 
 The exchange rate used is US$1/TD1.32 for 2006 and US$1/TD1.28 for 
¶2007.  End Note. 
 
¶5.  Tunisia's insurance density remains low when compared to the 
world average level of US$554.8, or to developed countries such as 
France (US$4,075.4) and the United States (US$3,923.7) or to 
emerging countries such as Mexico (US$139), Brazil (US$ 161), Turkey 
(US$89.2) and Lebanon (US$181.5). 
 
---------------- 
Market Structure 
---------------- 
 
¶6.  In Tunisia the sector is composed of corporations, mutual 
insurance companies, and agents.  There are currently 22 insurance 
companies including: 
 
    - 13 multi-line companies; 
 
    -  5 specialized companies: two in life 
         insurance, one in export insurance, one in credit 
         insurance, and one in reinsurance; and 
 
    -  4 off-shore companies. 
 
The 18 onshore companies are comprised of 15 corporations, two 
mutual insurance companies and one agriculture mutual fund.  Private 
companies dominate the market and held a total market share of 56.5 
percent in 2007, while state-owned companies and mutual insurance 
 
companies held 24.8 percent and 18.7 percent respectively. 
According to FTUSA, Tunisia's insurance premiums totaled 872.1 
Million TD (US$681 million) in 2007; a growth rate of 9.6 percent 
compared to 2006 (795.8 Million TD or US$602 million). 
 
¶7.  The role of insurance agents is extremely important because they 
participate actively in the development of the insurance companies' 
strategies and the marketing of their products.  In Tunisia, there 
are currently: 
 
     - 643 insurance agents; 
 
     -  57 brokers; 
 
     -  31 life insurance agents; 
 
     - 886 insurance experts and damage commissioners; and 
 
     -   8 actuary experts. 
 
--------------------------------------------- ---- 
Regulatory Institutions and Supporting Structures 
--------------------------------------------- ---- 
 
¶8.  Several institutions are engaged in the insurance sector in 
Tunisia as regulatory entities, but the most important institution 
is the General Insurance Committee (GIC), which is a central 
administration within the Ministry of Finance.  The GIC aims to 
protect the policy-holders' rights and safeguard the capacity of 
insurance and reinsurance companies to meet their commitments.  It 
intervenes in: 
 
- The control of insurance and reinsurance companies and 
the sector's related professions; 
 
- The monitoring of the sector's activity; 
 
- The study of all legal and technical issues related to the 
insurance and reinsurance operations and preparation of related 
regulations and law texts; and 
 
- The study of all matters related to the development and the 
organization of the sector. 
 
¶9.  Besides the General Insurance Committee there are: 
 
- The Tunisian Federation of Insurance Companies (Federation 
Tunisienne des Societes d'Assurance), which is in charge of the 
study and the defense of the economic and social interests of the 
profession. 
 
- The Central Office of Rates (Bureau Central des Tarifications), 
which fixes the insurance premium for coverage of civil liability 
related to the use of automobiles. 
 
- The Unified Office for Tunisian Automobile (Bureau Unifi 
Automobile Tunisien), which is an association of insurance companies 
authorized to practice civil liability insurance related to 
automobile accidents. 
 
------------------------------------ 
Structure of the Insurance Portfolio 
------------------------------------ 
 
¶10.  In 2007, the non-life insurance segment represented 89.14 
percent of Tunisian insurance companies' turnover.  Life insurance 
represents the remaining 10.86 percent, far below the world average 
of 60 percent.  The structure of the insurance market has not 
undergone major changes although it is seeing healthy growth rates 
across the board.  The automobile segment continues to dominate the 
sector with a 44.71 percent share of the total turnover in 2007, a 
growth of 7.93 percent over 2006.  The share of premiums for 
compulsory insurance (civil liability) as a percentage of auto 
premiums is going down gradually, from an average of 70 percent in 
the 1990s to 55 percent in 2007.  This could be explained by the 
commercial actions carried out by the insurance companies to 
encourage their customers to subscribe to optional guarantees for 
better coverage (theft, fire, broken windows, assistance, etc.). 
 
¶11.   The health segment represented 14.68 percent of the portfolio 
in 2007, a growth rate of 7.1 percent compared to 2006.  In 2006 and 
2007 this segment grew at a lower rate than the whole sector.  The 
various and technical risks segment registered a 12.76 percent share 
in 2007, a growth rate of 17 percent compared to 2006.  The life 
insurance segment's market share was 10.86 percent in 2007, 
producing the highest growth rate in the sector, 21.45 percent 
compared to 2006.  This high growth resulted from the incentives and 
 
tax relief granted to underwriters and beneficiaries of life 
insurance contracts and to the delivery of such contracts by banks 
and by the post office. 
 
------------ 
Market Share 
------------ 
 
¶12.  There are three types of insurance companies: private, public 
and mutual insurance companies.  According to FTUSA stats of 2007, 
the private companies dominate the market with a 56.3 percent market 
share.  The public sector, which is mainly represented by STAR, 
holds a 26.8 percent market share, and the mutual insurance 
companies hold a 6.9 percent market share.  In terms of growth rate, 
the mutual insurance companies' market share increased by 19.1 
percent between 2006 and 2007. 
 
¶13.  2007 statistics show that market shares of the main players 
were as follows: 
 
- STAR (public):       24.2 percent 
- COMAR (private):     12.1 percent 
- MAGHREBIA (private):  9.1 percent 
- AMI (mutual):         8.4 percent 
- ASTREE (private):     8.0 percent 
- CARTE (private):      7.8 percent 
- GAT (private):        7.3 percent 
- MAE (mutual):         6.0 percent 
 
¶14.  STAR dominates the non-life insurance segment.  It leads the 
auto insurance segment with a market share of 23.8 percent followed 
by AMI (15.2 percent), and COMAR (14.5 percent).  STAR also largely 
dominates the health insurance segment with a 42.8 percent market 
share followed by ASTREE (9.7 percent), GAT (9 percent), and COMAR 
(7.8 percent).  STAR (32.6 percent) holds the largest market share 
in the transport insurance segment followed by ASTREE (15.5 
percent).  The two specialized companies, COTUNACE and ASSURCREDIT 
together capture 87.3 percent of the credit insurance segment with 
COTUNACE capturing a 68.7 percent market share.  CTAMA (mutual 
insurance) dominates the hail and livestock mortality insurance 
segment with a 61.5 percent market share followed by COMAR (13.9 
percent).  Maghrebia leads the life insurance segment with a 17.2 
percent market share.  Hayett and Amina, two specialized companies 
in the life insurance segment, hold market shares of 14.3 percent 
and 4.7 percent, respectively. 
 
------------------------- 
2007 Performance Overview 
------------------------- 
 
¶15.  The insurance sector's total turnover for 2007 reached 872 
million TD (US$681.25 million) registering a 9.6 percent increase 
over 2006.  The non-life insurance segment continued to represent 
89.14 percent of the total market in 2007.  However, life insurance, 
with a 10.86 percent market share, posted the highest growth rate 
(21.45 percent over 2006).  The most important event that occurred 
in 2007 was the opening of 35 percent of the stock of the most 
important state owned insurer, STAR (Societe Tunisienne d'Assurances 
et de Reassurances) to private investors.  Ultimately in July 2008, 
the French mutual insurer Groupama won the bid and paid around 
US$100 million (70 million Euros) for its stake. 
 
------------- 
Opportunities 
------------- 
 
¶16.  Prior to February 2008, the insurance sector was under heavy 
protection that prevented foreign insurance companies from competing 
in the Tunisian market unless the majority of the capital was held 
by Tunisian partners.  Law No. 2008-8, adopted on February 13, 2008 
amended the Insurance Code and states in article 50A that foreign 
insurance companies no longer require a "Carte Commercante."  This 
was a special authorization given by the authorities to foreign 
companies allowing them to operate in the Tunisian insurance sector. 
 Foreign equity share restrictions have been eliminated and any 
foreign company can establish a commercial presence by setting up a 
subsidiary, forming a new company, or by acquiring an already 
established insurance supplier.  However to be registered in 
Tunisia, the foreign insurer has to request approval from the 
General Insurance Committee.  Once approved, foreign insurance 
suppliers can compete for insurance lines that are required of 
persons and businesses resident in the country and will be treated 
no less favorably than domestic service suppliers with respect to 
capital, solvency, reserve, tax, and other financial requirements. 
 
 
¶17.  With this liberalization, Tunisia meets its commitments under 
 
the WTO and European Union Association agreement, and opens up a 
previously protected sector.  This new context offers good 
opportunities for US companies looking to invest in Tunisia, 
particularly in the non-life insurance segment.  Potential investors 
should always conduct their own due diligence before finalizing any 
business ventures in Tunisia.  Relevant information on the 
investment climate in Tunisia can be found in the 2009 Country 
Commercial Guide located at 
http://www.buyusainfo.net/docs/x_8873541.pdf.  Potential investors 
might also want to participate in the insurance summit for North 
Arica and the Middle East that Tunisia will be hosting on April 
28-30. 
 
 
 
------------------------------------ 
Risks Related to the Tunisian Market 
------------------------------------ 
 
¶18.  As is the case in the majority of Muslim countries in the 
Middle East and North Africa (MENA) region, the life insurance 
segment is significantly underdeveloped because of its 
non-compliance to Sharia, or Islamic law.  In fact, the purchase of 
life insurance products is strongly influenced by perceptions of 
whether or not the products are compliant with Sharia, and life 
insurance is perceived to have prohibited elements of uncertainty, 
gambling and interest income. 
 
¶19.  In response to this societal desire to be in compliance with 
Sharia, Takaful - a form of insurance that complies with the 
principles of Sharia - has emerged as an alternative to conventional 
insurance.  Many foreign companies operating or intending to operate 
in the MENA region are seriously considering offering this type of 
insurance.  The other factor that foreign insurance companies have 
to consider is the limited awareness of life and disability 
insurance and their benefits within the country, which is partly 
driven by cultural factors, such as the reliance on the extended 
family network in case of death or disability. 
 
GODEC