Insurance market up 30% y-o-y in January

TIRANA, Feb. 26 – Albania’s insurance market registered a sharp 30 percent year-on-year increase in January 2013 although the number of insurance policies remained almost unchanged while paid claims rose by double-digits. Latest data by the Financial Supervisory Authority show new insurance premiums in January 2013 climbed to 754 million lek, up 30.2 percent year-on-year despite the number of insurance policies dropping by a slight 0.4 percent, and the amount of paid claims increasing by 22 percent to 167 million lek.
A sharp increase in the compulsory motor insurance, the DMTPL, which doubled to 290 million lek in January 2013 and accounted for 45 percent of the market, was the key driver of the growth in the first month of this year.
In a recent meeting with the Competition Authority which has drafted a regulation on banned deals in the insurance market, insurers asked for the removal of the 20 percent value added tax, arguing that under a decision by the Strasbourg Court insurance policies are described as a liability and not a final product.
The Competition Authority says the new regulation will allow the insurance companies to cooperate on determining the risk premium but not on determining the policies’ final prices.
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.
Data show insurance premiums in the domestic DMTPL compulsory car insurance grew by 53 percent despite the number of insurance policies growing by only 3.7 percent compared to 2011. The MTPL market share rose to 42 percent in 2012, up from 30 percent in 2011.
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.
In February 2012, rates for compulsory motor vehicle insurance more than doubled in a sudden unexpected move following a sharp drop after the market was liberalized in mid-2011.