Paid claims, 82 percent of which belong to motor insurance, were down by 2.44 percent year-on-year in the first half of this year, unveiling that although companies have more than doubled insurance rates, they have cut down on compensation for damage incurred.
TIRANA, July 29 – Albania’s insurance market registered a sharp 35 percent increase in the first half of this year boosted by higher motor insurance rates and a slight decline in paid claims, according to data published by the country’s Financial Supervisory Authority.
Data shows insurance premiums in the first half of this year rose to 5.3 billion (Euro 37.4 million), up 34.6 percent compared the first half of 2013 although the number of insurance policies was down by 1.34 percent.
Paid claims, 82 percent of which belong to motor insurance, were down by 2.44 percent year-on-year in the first half of this year, unveiling that although companies have more than doubled insurance rates, they have cut down on compensation for damage incurred.
The compulsory domestic auto MTPL insurance which has increased its market share by 11 percent to 47 percent in the first half of 2014 was the key driver of the insurance market mainly due to insurance rates having more than doubled compared to early 2013.
Albania’s Competition Authority says it has launched a thorough investigation into the nine insurance companies operating in Albania after observing signs of alleged price-fixing in the compulsory auto insurance policies.
In February 2014, compulsory motor insurance policies, known as Motor Third Party Liability (MTPL) and accounting for around 40 percent of the insurance market rose by 6,000 lek (Euro 42) to an average of 20,000 to 21,000 lek (Euro 140 to 147) by all nine companies operating on the market including state-owned INSIG insurer. However, all insurance companies were forced to reduce prices last February in order to maintain their market shares after state-owned INSIG was forced by government to cut rates by around 20 percent to 16,000 lek (Euro 112).
Data published by the Financial Supervisory Authority show insurance premiums in 2013 dropped by 4.63 percent to 8.5 billion lek (Euro 60 million), affected by a 15.5 percent decline in compulsory motor insurance premiums, which account for around 40 percent of the market share.
The Albanian insurance market, dominated by two Austrian insurance groups, is overwhelmingly non-life oriented with around 87.7 percent while voluntary insurance accounts for 54.2 percent of total insurance premiums.
In its latest financial system stability assessment, the IMF describes Albania’s insurance market as one of the smallest in Europe, with assets of around 1.5 percent of total financial system assets. “Its development has been hindered by several factors, including lax insurance regulation, low disposable incomes, and a poor record of claims performance,” says the Fund.
