Morocco raises insurance tax to bolster natural disaster fund

Morocco’s government will implement a significant increase in the parafiscal solidarity tax on insurance contracts,raising the rate from 1 percent to 1.5 percent. The amendment,scheduled for approval by decree at this Thursday’s Council meeting,aims to strengthen the nation’s disaster response capabilities following recent catastrophic events.

The additional revenue will flow directly into the Solidarity Fund Against Catastrophic Events (FSEC),which provides compensation to uninsured victims of natural disasters,reports le360 news platform,adding that Finance Minister Nadia Fettah justified the measure in an explanatory note,citing the need to “reinforce the Fund’s financial capacity” to meet its growing obligations amid escalating natural disaster impacts.

The tax adjustment responds to mounting global challenges in disaster management. International reinsurance costs have surged due to increasing frequency and intensity of natural catastrophes worldwide. Morocco experienced this firsthand following the September 2023 Al Haouz earthquake,which doubled the Fund’s seismic coverage expenses.

The tax applies broadly across insurance sectors,encompassing maritime and aviation vessels,motor vehicles,assistance operations,accident and health coverage,fire and natural elements protection,agricultural insurance,and general risk policies. Life insurance contracts and retirement pensions held by non-residents remain exempt,along with policies covering foreign risks or enterprises based abroad.

This fiscal adjustment reflects Morocco’s proactive approach to disaster preparedness and victim support infrastructure. By broadening the financial base of the solidarity fund through increased insurance taxation,authorities aim to ensure adequate resources for future catastrophic events. The measure underscores the government’s recognition that climate-related disasters require enhanced financial mechanisms for effective response and recovery operations.