Insurance market surges 40 percent

TIRANA, Oct. 1 – Fuelled by a sharp 90 percent increase in compulsory motor insurance revenue due to insurance rates having more than doubled compared to last year, Albania’s insurance market registered a record 41 percent increase in the first eight months of this year, which is the highest in the past five global crisis year.
Data published by the country’s Financial Supervisory Authority shows insurance premiums in the first eight months of this year reached around 7.5 billion lek (Euro 53 million), up 41 percent compared to the same period last year, although the number of insurance policies rose by a mere 0.54 percent to 670,500 year-on-year.
Despite the sharp double-digit market growth, paid claims during the first eight months of this dropped to 1.78 billion lek (Euro 12.5 million), down 0.7 percent compared to the same period last year.
The compulsory auto insurance known as the Motor Third Party Liability (MTPL) increased its market share to around 47 percent in terms of income in the first eight months of this year, up from 36 percent during the same period last year.
In its latest financial system stability assessment, the IMF describes Albania’s insurance market as one of the smallest in Europe, with assets of around 1.5 percent of total financial system assets. “Its development has been hindered by several factors, including lax insurance regulation, low disposable incomes, and a poor record of claims performance,” says the Fund.
In a bid to promote competition, Albania’s Competition Authority has warned insurance companies operating in Albania to introduce risk-based pricing on auto insurance by next October otherwise they risk being fined up to 10 percent of their annual turnover. The Authority demands the immediate implementation of the 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 the geographical area.