Morocco increases solidarity tax for natural disasters

The Moroccan government has approved a bill to raise the parafiscal tax that finances the country’s solidarity fund for catastrophic events. The solidarity tax, which is levied on insurance premiums and contributions, will increase from 1% to 1.5%.

The measure comes amid a growing frequency of natural disasters and a global surge in reinsurance costs for catastrophe-related risks. These developments have strained the financial stability of the solidarity fund, which provides compensation to victims of natural disasters not covered by conventional insurance policies.

The Al Haouz earthquake in September 2023 exposed the limitations of the current system in handling the financial burden of large-scale risks such as seismic events.

As a result, the tax hike may lead to higher insurance premiums, as insurers seek to offset this new tax burden.