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
TIRANA, Jan. 29 – 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 published by the Financial Supervisory Authority show total insurance premiums in 2012 reached around 9 billion lek (Euro 63 million), up 7.38 percent compared to 2011 despite the number of insurance policies falling by a sharp 19 percent. The market continued remaining non-life oriented with around 90 percent of the total premiums, leaving life insurance with a 9.8 percent share and reinsurance with 0.32 percent. Compulsory insurance continues holding the majority 51 percent of the market share. Paid claims, three-quarters of which belongs to car insurance, grew by 27 percent to 2.8 billion lek in 2012.
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.
Back in 2011, the liberalization of compulsory insurance market considerably affected revenues for companies operating in Albania with competition bringing lower fees. Data published by the Financial Supervisory Authority show new insurance premiums in 2011 reached 8.3 billion lek, up only 1.8 percent compared to 2010 despite the number of insurance policies registering a sharp 77 percent increase to 1.3 million. Back in 2010, the insurance market grew by 4.17 percent despite the number of policies dropping by 2.5 percent.
In February 1 2012, rates for compulsory motor vehicle insurance more than doubled in a sudden unexpected move following a sharp drop after the market was liberalized in mid-2011.
The insurance market shrank by 15 percent in the first quarter of 2012 and 5.5 percent in the first half.
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.
Concerned over a sharp drop in compulsory car insurance rates over the past two months, the Albanian Financial Supervisory Authority has warned it will intervene in the already liberalized market if the companies do not reflect risks in calculating premium rates. In a recent meeting with directors of the nine insurance companies operating in Albania, Enekeleda Shehi, the director of the Supervisory Authority warned the companies’ efforts to offer low rates not covering risks are short-term goals which could bring negative impacts on their financial stability in the long-term. She called on company officials to show more professionalism in determining insurance rates and claims.
Currently, compulsory motor insurance rates have dropped to 6,000 to 7,500 lek annually, almost twice less compared to a couple of months ago.
Tirana dominates insurance market with a 60% share
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. The report on Albania’s insurance geography shows the region of Tirana, which includes the districts of Tirana and Kavaja constitutes 60 percent of the insurance market.
Second comes the region of Durres with 7.89 percent followed by the southern regions of Fier with 5.45 percent and Korca at 4.96 percent. Insurance market share in the remaining regions varies from 0.59 percent in Kukes to 4.12 percent in Gjirokastra.
However, Albania’s per capita consumption of insurance although increasing by 385 lek to 2,937 lek is considered one of the lowest in the region. Albanians pay on average 25 dollars annually for compulsory and voluntary insurance of vehicles, as well as property and life insurance, a small amount compared to other European countries.
