New insurance premiums during the first three quarters of 2012 rose to 6.5 billion lek, down only 0.18 percent year-on-year
TIRANA, Oct. 29 – The insurance market almost ended its downward trend last September when the market’s gap narrowed to only 0.18 percent for the first three quarters of 2012. An increase in compulsory motor insurance rates, which the Competition Authority has described as price fixing, is the main reason behind the new situation after 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 35 percent year-on-year in the first 3 quarters of this year despite the number of insurance policies growing by only 1.7 percent compared to the first nine months of 2011. New insurance premiums during the first three quarters of 2012 rose to 6.5 billion lek, down only 0.18 percent year-on-year. Paid claims, three-quarters of which belongs to motor insurance, grew by 33.6 percent to 2.1 billion lek during this period.
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.
