TIRANA, Jan. 29 – Albania’s insurance market slowed down for a fourth year in a row in 2017 as it remained overwhelmingly non-life oriented and reliant on compulsory motor insurance accounting for two-thirds of the market income.
A report by Albania’s Financial Supervisory Authority shows insurance premiums in the eight private companies operating in the market grew by an annual 5.4 percent to about 16.2 billion lek (€121 million) in 2017 as the number of insurance policies recovered by 12 percent to 1.26 million, hinting a drop in insurance rates.
The small insurance market of about 1 percent of the GDP has been slowing down in the past few years with annual growth rates dropping from 36 percent in 2014 to 21 percent in 2015 and 17.5 percent in 2016 following a moderate contraction in 2013, when it suffered its first blow following the 2008 global financial crisis.
The market continued remaining non-life oriented with its insurance premiums accounting for 92 percent of the total and compulsory-oriented with 61.5 percent, the watchdog said.
Paid claims in the insurance market, the overwhelming majority of which belongs to vehicle insurance, continued their upward trend, increasing by 15.8 percent to 5.5 billion lek (€41.2 million).
Compulsory vehicle insurance slightly increased its market share in the non-life segment to 66.8 percent, being the key driver of the compulsory denominated market.
Meanwhile, insurance against fire and natural forces only increased by 3.6 percent to about 1.4 billion lek (€10.6 million) in 2017, despite the country being regularly hit by natural disasters such as flash floods in the past few years, leaving businesses and households completely uncovered.
The Financial Authority and the government have announced an initiative to make insurance against natural disasters such as flooding and earthquakes compulsory for every business and household for a reasonable rate, but some experts have described the initiative as a new hidden tax the government is trying to impose.
Insurance companies whose annual turnover is at about €112 million at a modest per capita insurance of about €35 million, see the introduction of compulsory natural disaster insurance as a golden opportunity to boost their income considering about 1 million home and businesses that could almost double their annual income.
The life insurance market, dominated by the compulsory credit life insurance, also increased by 23 percent to 1.2 billion lek (€9 billion) in 2017. Only three companies operate in the life insurance market including former state-run Insig, whose life insurance operator was acquired in 2017 by two of the country’s richest men, Samir Mane of the owner of Balfin Group and Shefqet Kastrati of the Kastrati group.
The acquisition was made from Eurosig, an Albanian-owned insurer which acquired state-run INSIG insurer for 2.2 billion lek (€15.8 million) in early 2016, increasing the insurer’s market share to 20 percent.
Albania’s insurance market is dominated by Austrian companies holding about 60 percent of the market share.
