Insurance market growth by 30% in year’s first two months

TIRANA, March 26 – Fuelled by a double-digit increase in motor insurance premiums, Albania’s insurance market recovered strongly in the first couple of months of 2014 after a slight shrink in 2013. Data published by the Financial Supervisory Authority show insurance premiums in the first two months of 2014 reached 1.7 billion lek (Euro 12 million), up 30.2 percent compared to the same period last year.
The recovery was a result of sharp rise in motor insurance rates, which more than doubled compared to early 2013. In the first two months of 2014, the number of motor insurance policies dropped by 2.6 percent while paid claims rose by only a negligible 0.5 percent.
Compulsory motor insurance premiums, which account for around half of the insurance market, rose by around 40 percent. Their market share rose to 45.25 percent in the first two months of 2014, up from 43 percent during the same period last year.
Paid claims, whose 80 percent belongs to motor insurance, grew by only 0.54 percent to 406 million lek (Euro 2.8 million) in the first two months of 2014.
The increase is a result of compulsory auto insurance trading at an average of 15,000 lek (Euro 105), double compared to the early 2013.
All insurance companies were forced to reduce prices last February in order to maintain their market shares after INSIG cut rates by around 20 percent to 16,000 lek (Euro 112). INSIG’s market share in the compulsory motor insurance dropped to 6.14 percent in 2013, down from 7.41 percent in 2012, according to the Financial Supervisory Authority.
The market shrink in 2013 seems the reason behind the increase in motor insurance rates in early 2014. Affected by a double-digit decline in compulsory motor insurance, the insurance market shrank by 4.6 percent in 2013, registering the first decline in the past five global crisis years.
Data published by the Financial Supervisory Authority show insurance premiums in 2013 dropped by 4.63 percent to 8.5 billion lek (Euro 60 million), affected by a 15.5 percent decline in compulsory motor insurance premiums, which account for around 40 percent of the market share.
Albania’s insurance market rose by 7.8 percent in 2012, by 1.8 percent in 2011, 4.17 percent in 2010 and by 11.3 percent in 2009 soon after the outbreak of the global financial crisis.
Some nine insurance companies operate in Albania, of which only INSIG remains wholly state-owned following unsuccessful privatization attempts.
The Albanian insurance market, dominated by two Austrian insurance groups, is overwhelmingly non-life oriented with around 87.7 percent while voluntary insurance accounts for 54.2 percent of total insurance premiums.
In its latest financial system stability assessment, the IMF describes Albania’s insurance market as one of the smallest in Europe, with assets of around 1.5 percent of total financial system assets. “Its development has been hindered by several factors, including lax insurance regulation, low disposable incomes, and a poor record of claims performance,” says the Fund.