Car insurance rates to be calculated on driving records

TIRANA, April 17 – Two years after the liberalization of the compulsory car insurance market, the Albanian Financial Supervisory Authority says it has concluded a project targeting efficient tariffs based on risk and the implementation of a Bonus-Malus system under which drivers with a clear driving record will pay less. Introducing the project drafted with the World Bank assistance, Enkeleda Shehi, the head of the Supervisory Authority, said the current market conditions were unstable with sharp fluctuation in tariffs. However, the Financial Supervisory Authority says it has relinquished the idea of imposing a price floor on insurance rates after the Competition Authority has suggested that such a decision would bring limited competition in the market.
The new scheme takes into consideration the cars’ age and engine capacity, but also driving record and geographical area.
The new scheme introduced by Shehi while presenting the annual report at the parliamentary economy committee is being drafted under World Bank assistance.
“All risk components will be taken into consideration, starting from the geographical area, the age of insured cars, engine capacity, and driving record, providing a fair price,” said Shehi earlier.
Fuelled by an increase in compulsory car insurance rates, Albania’s insurance market rose by a moderate 7.4 percent in 2012, registering the biggest increase in the past three years. Data show insurance premiums in the domestic MTPL compulsory car insurance grew by 53 percent despite the number of insurance policies growing by only 3.7 percent compared to 2011. The MTPL market share rose to 42 percent in 2012 down from 30 percent in 2011.
Last October, eight insurance companies operating in Albania were fined a total of 89 million lek (Euro 625,000) after the Competition Authority uncovered a price-fixing deal in compulsory motor insurance policy. The deal was made in February 2012 when all companies fixed motor insurance prices in a banned deal severely damaging competition.