Restructuring Motor Third-Party Liability Insurance in Tunisia

Project Development Objective (PDO)

The objective of this project is to restructure the Motor Third-Party Liability (MTPL) insurance market through the development of a regulatory framework and technical tools that will help set up risk-based premiums and improve the sector’s solvency, claims management and information center, and sustainability in the long term.


Motor Third-Party Liability insurance business is a compulsory class in Tunisia and has the biggest share of the market, equivalent to 46 percent of account gross premium written. MTPL insurance has been subject to a centrally set tariff by the Ministry of Finance since 2005. This system creates heavy price constraints on insurers and faces additional threats emanating from claim inflation, escalating fraud, and the number of uninsured vehicles.
This project aims to assist the Tunisia General Insurance Committee (Comité General des Assurances) as the regulator in the development of policies and processes to enable the move away from centrally managed tariff-based pricing toward risk-based pricing of the products on the MTPL insurance market. The ultimate objective is to ensure that this compulsory product is sustainable, improves the reputation of the industry, and covers the liabilities appropriately.


The envisaged activities of this project are as follows:
1.  Assessing the current situation with motor and MTPL insurance risk management and delivering a
    report with a full review (This report includes a review of multiyear MTPL insurance policy data
    and corresponding claims data and the architecture of the MTPL insurance information center.) 
2.  Developing a road map to set up the principles for the restructuring and, later, the full
     liberalization of the MTPL market, as well as coordinating a workshop to present the road map
3.  Developing an actuarial model and detailed description of the methodology for the calculation of
     premiums, reserves, and tariffs
4.  As part of the actions outlined in the roadmap, assisting in drafting the necessary legal framework
     for the transition to the risk-based MTPL insurance market

Expected Outcomes

The key expected short-term outcomes for the project are as follows:
1.  Better understanding by the Tunisia General Insurance Committee of the needed changes in the
     legal, regulatory, and policy framework to restructure and then fully liberalize the MTPL 
     insurance sector (Once the committee approves the roadmap, its implementation will result in 
     the transition of the market from the fixed tariff to a risk-based tariff with adequate 
     technical tools and supervisory capacity [financial and human resources] in place to make the
     enforcement consistent.)
2.  Developing a detailed methodology for the actuarial calculation of premiums, reserves, and tariffs
     for the market, as related to the technical conditions (The MTPL insurance database of the 
     information center is expected to enable actuarial models’ testing and application into insurers’
     daily underwriting processes.) 
The expected medium- to long-term outcomes are as follows:
1.  Fully transitioning the MTPL insurance sector to the risk-based tariff system
2.  Enabling insurers to price their products fairly, reserve adequately, and thus handle claims
     payment timely and adequately
3.  Under effective supervision enforcement, reducing fraud and claims inflation, thus increasing the
     profitability and sustainability for insurers
4.  Reducing the number of uninsured vehicles, thus helping enhance the coverage and security for 
     related parties
5.  Enabling overall healthy and sustainable growth of the MTPL insurance sector, which would
     contribute to reduced accident frequency as a result of citizens’ better risk-price awareness