Insurance market slows down to 3.9%

TIRANA, May 28 – After a double-digit increase the first quarter of 2012, the insurance market slowed down to 1.64 percent at the end of the first five months of this year although paid claims dropped by 11 percent compared to the same of 2012, says a report released by the Albanian Financial Supervisory Authority this week.
Insurance premiums in the first five months of 2013 reached 3.4 billion lek, up only 1.64 percent compared to the same period last year. Data show the slowdown was first of all affected by a sharp drop in the compulsory motor insurance DMPL, accounting for around 40 percent of the market share, which in the first five months of the year dropped by 8.9 percent.
The Albanian insurance market is overwhelmingly non-life oriented with around 88 percent while voluntary insurance accounts for 55.7 percent of total insurance premiums.
Albanian insurance companies are paying out less in claims during this year. Paid claims during the first five months of this year reached 1.16 billion lek, down 11 percent compared to the same period in 2012. Fuelled by an increase in compulsory car insurance rates, Albania’s insurance market rose by a moderate 7.4 percent in 2012, registering the biggest increase in the past three years.
Last October, 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.
Two years after the liberalization of the compulsory car insurance market, the Albanian Financial Supervisory Authority says it has concluded a project targeting efficient tariffs based on risk and the implementation of a Bonus-Malus system under which drivers with a clear driving record will pay less. The new scheme takes into consideration the cars’ age and engine capacity, but also driving record and geographical area. Recent price movements have been very turbulent and this turbulence will continue in the short term, warns the World Bank.