New formula to calculate car insurance based on driving record

TIRANA, Aug. 14 – The Directorate General of Road Transport says it has started working on implementing a penalty points system for driving offences which will be concluded with a new formula on the calculation of compulsory insurance for motor vehicles. Under the new formula, drivers with a clear driving record will pay less in their annual insurance and those involved in car accidents or having been imposed fines will pay more. Currently, fixed tariffs are applied in the compulsory insurance of motor vehicles which accounts for around 40 percent of the market.
“All risk components will be taken into consideration, starting from the geographical area, the age of insured cars, engine capacity, and driving record, providing a fair price,” , Ekelejda Shehi, the head of the Financial Supervisory Authority has previously said. The project’s implementation is expected to start by the end of this year.
Latest data published by the Financial Supervisory Authority show the insurance market shrank by 5.5 percent in the first half of this year due to the number of insurance policies falling by a quarter and the amount of paid claims significantly rising. 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. 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 in Feb. 2012. Annual insurance policies for mini-buses, lorries and busies vary from 20,000 lek to 44,000 lek.