TIRANA, Nov. 14 – Insurance companies are paying less in claims as market growth is heading to a slowdown for the fifth year in a row.
A report by Albania’s Financial Supervisory Authority shows insurance premiums in the eight private companies operating in Albania grew by an annual 3.6 percent to 12.46 billion lek (around €100 million) in the first three quarters of this year as the market remained overwhelmingly non-life oriented and reliant on compulsory motor insurance accounting for two-thirds of the market income.
Meanwhile, spending on insurance claims dropped to 3.4 billion lek (€27 mln), down by 8.5 percent compared to the first three quarters of 2017, to account for only about a quarter of the insurers’ income over January-September 2018.
The decline in insurance claims paid for this year comes as the number of road accidents dropped by 12.3 percent to about 1,300 with a death toll of 152 and around 1,600 injured, in slightly lower figures compared to the first three quarters of 2017, according to state-run statistical institute, INSTAT.
Growth in the small insurance market of about 1 percent of the Albanian GDP slowed down to 5.4 percent in 2017 following double-digit growth rates in 2013-2016 and a moderate contraction in 2013, when it suffered its first blow following the 2008 global financial crisis.
The moderate 2017 growth reflects a 5 percent growth in the number of vehicles undergoing compulsory technical control and paying insurance last year. Some 421,573 vehicles underwent technical control last year, with the compulsory insurance accounting for 52 percent market share, according to the Institute of Transport and the Financial Supervisory Authority. Another 14 percent of the market’s income also relies on cross-border compulsory vehicle insurance policies.
Meanwhile, claims paid out in the insurance market, the overwhelming majority of which belongs to vehicle insurance, continued their upward trend in 2017, increasing by 15.8 percent.
Insurance companies whose annual turnover is at about €112 million at a modest per capita insurance of about €35 million, see the proposed introduction of compulsory natural disaster insurance or channeling a portion of the mandatory social security contributions to the country’s nascent private pension funds as a golden opportunity to boost their income considering about 1 million home and businesses and more than 700,000 contributors to the pension system.
