Insurance market shrinks by 8.3%

TIRANA, May 28 – Insurance market performance continues improving with the market’s shrink considerably narrowing compared to the first two months of this year which saw compulsory motor insurance rates double in a sudden move. Latest data by the Financial Supervisory Authority show the market’s shrink in Jan-April 2012 narrowed to 8.34 percent compared to 24.6 percent in the first two months of this year. The situation is a result of higher income from compulsory motor insurance rate which in Feb. 2012 were doubled by all companies following a six month-liberalization period which initially saw them reduced. The move is being investigated into by the Competition Authority on allegations of a banned deal.
Detailed data by the Supervisory Authority show the insurance market premiums reached 2.7 billion lek in Jan-April 2012, down 8.34 percent year-on-year, with the non-life market accounting for 88 percent.
Claims paid in the first four months of this year also rose by 57 percent to 1 billion lek.
Detailed data show compulsory motor insurance known as DMTPL rose by 17.6 percent to 868 million lek in Jan-April 2012 accounting for 36.5 percent of the market compared to only 28.5 percent during the same period last year.
Green Card insurance fell by 51 percent during the first four months of this year.
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.
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.