Paid claims, three-quarters of which belongs to motor insurance, grew by 32 percent to 2.3 billion lek during the first ten months of 2012
TIRANA, Nov. 26 – The insurance market returned to growth last October overcoming its negative growth rates during the first nine months of this year only thanks to compulsory motor insurance rates which since early 2012 have more than doubled in a deal which the Competition Authority has ruled as price-fixing. Data published by the Financial Supervisory Authority show new insurance premiums during the first ten months of 2012 rose to 7.4 billion lek, up 4.25 percent year-on-year.
The market shrank by 15 percent in the year’s first quarter and 5.5 percent in the first half. Data show insurance premiums in the domestic MTPL compulsory car insurance grew by 41.3 percent despite the number of insurance policies growing by only 1.8 percent compared to the first ten months of 2011. Paid claims, three-quarters of which belongs to motor insurance, grew by 32 percent to 2.3 billion lek during this period.
The market continued remaining non-life oriented with around 90 percent of the total premiums, leaving life insurance with a 9.5 percent share and reinsurance with only 0.06 percent.
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) in the second half of 2012 after the liberalization of the market to 14,000 lek (Euro 100) for common cars with a 1,600 to 2,400 cm3 engine and above in Feb. 2012. Annual insurance policies for mini-buses, lorries and busies vary from 20,000 lek to 44,000 lek.
A couple of weeks ago, 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.
The Competition Authority has recommended the Financial Supervisory Authority that risk premium calculations should be made by the Authority based on data obtained independently from insurance companies. It also recommended that the Financial Supervisory Authority should remove its six month deadline for the company to change compulsory insurance rates.
The Authority also suggests the implementation of the Bonus-Malus system in compulsory car insurance under which drivers with a clear driving record will pay less.
The region of Tirana, where around one-third of the country’s 3.2 million population lives and most businesses operate, accounts for 60 around two-thirds of the insurance market in Albania, according to a 2011 report published by the Financial Supervisory Authority.
