The insurance market shrank by 8.4 percent to 5.3 billion lek (Euro 37 million) in the first eight months of this year, compared to the same period last year
TIRANA, Sept. 31 – Affected by a double-digit decrease in compulsory motor insurance, the insurance market further extended its decline in August 2013. Data published by the Albanian Financial Supervisory Authority show the insurance market shrank by 8.4 percent to 5.3 billion lek (Euro 37 million) in the first eight months of this year, compared to the same period last year. Insurance markets are also paying out less in claims during this year. Insurance companies paid 1.8 billion lek (around Euro 13 million) in claims during the first eight months of the year, down 4.5 percent compared to the same period last year.
Insurance premiums in the compulsory DMTP motor insurance dropped by 18.5 percent to 1.6 billion lek accounting for a market share of 36 percent.
The situation reflects the frequent price fluctuations in insurance policies after the liberalization of the market a couple of years ago. In the first half of 2013, the insurance market grew by 2.45 percent while paid claims dropped by 8.9 percent compared to the same period in 2012.
The Albanian insurance market is overwhelmingly non-life oriented with around 87.7 percent while voluntary insurance accounts for 54.2 percent of total insurance premiums.
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.
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.
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. The new scheme takes into consideration the cars’ age and engine capacity, but also driving record and geographical area. Recent price movements have been very turbulent and this turbulence will continue in the short term, warns the World Bank.
Some nine insurance companies operate in Albania, of which only INSIG remains wholly state-owned following unsuccessful privatization attempts.
