The insurance market shrank by 15.74 percent in the first quarter of this year despite motor insurance rates, which account for around 37 percent of total revenues, having doubled since Feb. 2012
TIRANA, April 30 – Two months after compulsory motor insurance rates were doubled in a sudden move which is being investigated into by the Competition Authority, the insurance market continues suffering negative growth rates.
Latest data published by the Financial Supervisory Authority show the insurance market shrank by 15.74 percent in the first quarter of this year despite motor insurance rates, which account for around 37 percent of total revenues, having doubled since Feb. 2012.
The insurance market suffered a sharp 32 percent shrink in Jan. 2012 but performance slightly improved to -24.6 percent for the first two months of 2012 after all companies raised compulsory motor insurance rates in Feb. 2012 following a six month-liberalization period which saw them reduced.
The market continued remaining non-life oriented with around 87 percent of the total premiums, with insurance policies having dropped by 26 percent to 218,770 in the first quarter of this year.
The Supervisory Authority says the eight companies operating in Albania paid 722 million lek in claims during Jan-March 2012, up 42.85 percent compared to the same period last year. Motor insurance claim account for 546 million lek or 75.5 percent of total gross paid claims.
Detailed data show compulsory motor insurance known as DMTPL rose by 8.9 percent to 605 million lek in Jan-March 2012 increasing its market share to 37.24 percent, compared to 28.31 percent in the first quarter of 2011. Green Card insurance fell by 49 percent during the first three months of this year.
The Competition Authority has recently launched an enquiry into the compulsory motor insurance after all eight companies operating in the market doubled their policy rates last February following a drop after the liberalization in mid-2011.
In a recently published decision, the Competition Authority says the increase and price fixing by all eight companies in a sudden move and at the same level could have been caused as a result of a banned cartel deal which is a severe violation to the competition protection law.
Meanwhile, the Financial Supervisory Authority has recently announced it is working on introducing a new scheme to calculate the compulsory motor insurance policies taking into consideration the cars’ age and engine capacity, but also driving record and geographical area.
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) to 14,000 lek (Euro 100) for common cars with a 1,600 to 2,400 cm3 engine and above. Annual insurance policies for mini-buses, lorries and busies vary from 20,000 lek to 44,000 lek.
Poor performance in 2011 and a further deterioration in January 2012 is the reason behind insurance companies the double of compulsory insurance rates for motor vehicles.
The insurance market grew by a mere 1.8 percent in 2011 despite the number of insurance policies rising by 77 percent. The 2011 growth was stimulated by a boom in health insurance policies following the visa liberalization in mid-Dec. 2010 and less paid claims. Gross paid claims, 78 percent of which belong to compulsory motor insurance, reached around 2.2 billion lek for 2011, down 4.3 percent compared to 2010.
At present there are eight companies operating in the Albanian, in a market dominated by Austrian-based insurers.
