Data also prove the difficult situation in lending with debtor’s life premiums dropping by 22 percent and the saving trend for trips abroad with the “life and health in travel” category shrinking by 54 percent
TIRANA, July 30 – Five months after the compulsory motor insurance rates were doubled, the Albanian insurance market continues remaining in crisis. Latest data published by the Financial Supervisory Authority show the insurance market shrank by 5.5 percent in the first half of this year due to the number of insurance policies falling by a quarter and the amount of paid claims significantly rising.
For the first six months of this year, compulsory motor insurance known as DMTPL, accounted for 39 percent of the market share, registering an increase of 9 percent compared to the first half of 2011.
Insurance premiums in the first half of 2012 reached around 4 billion lek, down 5.56 percent compared to a year ago, with the number of insurance policies dropping by 25.4 percent to 465,450. The market continues remaining non-life oriented by 89 percent. Paid claims, 70 percent of which belongs to motor insurance, rose by 36 percent to 1.55 billion lek during the first half of 2012.
Data also prove the difficult situation in lending with debtor’s life premiums dropping by 22 percent and the saving trend for trips abroad with the “life and health in travel” category shrinking by 54 percent.
Compulsory DMTPL insurance rose by 24 percent to 1.4 billion in the first half of 2012.
In the first two months of 2012, the insurance market registered negative growth rates as high as 24.6 percent but started its recovery later in March after motor insurance policies were doubled by all eight companies following a six month-liberalization period which initially saw them reduced. The move is being investigated into by the Competition Authority on allegations of a banned deal.
In 2011, the insurance market grew by 1.8 percent, down from 4.17 percent a year ago.
In a recently published decision, the Competition Authority says the increase and price fixing by all eight companies in a sudden move and at the same level could have been caused as a result of a banned cartel deal which is a severe violation to the competition protection law.
The Financial Supervisory Authority has recently announced it is working on introducing a new scheme to calculate the compulsory motor insurance policies taking into consideration the cars’ age and engine capacity, but also driving record and geographical area.
Locally known as domestic MTPL, the compulsory motor insurance fees rose from an average of 5,000 to 6,000 lek (Euro 36 to 43) to 14,000 lek (Euro 100) for common cars with a 1,600 to 2,400 cm3 engine and above. Annual insurance policies for mini-buses, lorries and busies vary from 20,000 lek to 44,000 lek.
Last June, Ansig became the ninth insurer in the Albanian market. The Albanian Financial Supervisory Authority says it has licensed Ansig to operate in the non-life market.
A wholly-owned Albanian company, Ansig has been established with an initial capital of 370 million lek (Euro 2.6 million).
At present there are eight companies operating in Albania, in a market dominated by Austrian-based insurers. Insig is the only wholly state-owned company and has been put up for sale.
Insurance penetration (premiums as a proportion of GDP) in 2011 was around 0.67 percent in Albania, a relatively low rate even compared to regional countries.
