Natural disasters/solidarity tax: With the decree ratified, insurance premiums will increase
A Unless insurance companies decide to absorb part of the additional cost, insurance premiums are set to rise. The Government has approved an increase in the solidarity tax on insurance premiums and contributions from 1% to 1.5% to cover the cost of natural disasters. This decision will have repercussions for both households and businesses, in a context where climate risks are multiplying and the cost of reinsurance is skyrocketing.
Approved by the Government Council on Thursday, August 28, 2025, the decree formalizes the increase in this tax, which is intended to feed the Solidarity Fund for Catastrophic Events (FSEC). This mechanism compensates victims who do not have insurance coverage.
The measure aims to strengthen the Fund’s financial capacity to enable it to meet its commitments. This is a budgetary emergency linked to the increase in natural disasters. The Al Haouz earthquake in September 2023 was a turning point. Since this disaster, the cost of reinsurance has increased. In any case, the increase in extreme weather events is leading to a significant rise in premiums worldwide, weighing heavily on the financial stability of protection mechanisms.
Law 110-14 on catastrophic risks, which came into force in January 2020, has two components. An insurance scheme for victims with insurance contracts and a solidarity scheme for individuals who are not covered by insurance. This is a benefit system managed by the “Solidarity Fund for Catastrophic Events.”
In terms of the insurance scheme, the law requires that coverage against the consequences of catastrophic events be systematically included in contracts covering property damage or civil liability. This coverage protects policyholders for bodily injury and property damage, whether to their homes, businesses, or industrial facilities.
The FSEC Fund takes over in terms of the solidarity scheme for uninsured persons. It compensates for bodily injury and loss of the main residence, up to a limit of MAD 250,000 (USD 27,568) for the residence and up to 70% of the compensation awarded to insured persons for bodily injury.
The tax increase that has just been approved applies to a wide range of products: land, sea, and air vehicle insurance, credit risk contracts, personal accident, disability, and health insurance, as well as policies covering fire, natural disasters, hail, and livestock mortality. However, certain categories remain exempt, namely life insurance and pension contracts taken out by non-residents and policies covering risks occurring abroad or related to companies established outside Morocco.
Khadija MASMOUDI
