TIRANA, Oct. 8 – Albania’s insurance market continues remaining highly concentrated in Tirana which accounts for almost two-thirds of the market revenue, according to an insurance geography report published by the Financial Supervisory Authority. The region of Tirana, where a quarter of the country’s 2.8 million resident population lives, accounts for more than one-third of the country’s GDP with the services sector dominating with 58 percent, according to a regional accounts report published by the country’s state Institute of Statistics INSTAT.
While the region of Tirana provides 63.4 percent of total insurance premiums, the contribution in other regions ranges from 0.7 percent in the northeastern region of Kukes to 7.84 percent in Durres. The regions of Fier and Shkodra account for 5.2 percent and 4.12 percent of the market share respectively.
Albania’s per capita consumption of insurance although increasing by 263 lek to 3,200 lek (Euro 22.2) in 2012 is considered one of the lowest in the region. Albanians pay on average 25 dollars annually for compulsory and voluntary insurance of vehicles, as well as property and life insurance, a small amount compared to other European countries.
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 published by the Financial Supervisory Authority show total insurance premiums in 2012 reached around 9 billion lek (Euro 63 million), up 7.38 percent compared to 2011 despite the number of insurance policies falling by a sharp 19 percent. Paid claims, three-quarters of which belongs to car insurance, grew by 27 percent to 2.8 billion lek in 2012.
Back in 2011, the liberalization of compulsory insurance market considerably affected revenues for companies operating in Albania with competition bringing lower fees.
In October 2012, 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.
Insurance market shrinking in 2013
Affected by a double-digit decrease in compulsory motor insurance, the insurance market further extended its decline in August 2013. Data published by the Albanian Financial Supervisory Authority show the insurance market shrank by 8.4 percent to 5.3 billion lek (Euro 37 million) in the first eight months of this year, compared to the same period last year. Insurance companies paid 1.8 billion lek (around Euro 13 million) in claims during the first eight months of the year, down 4.5 percent compared to the same period last year.
Insurance premiums in the compulsory DMTP motor insurance dropped by 18.5 percent to 1.6 billion lek accounting for a market share of 36 percent.
The situation reflects the frequent price fluctuations in insurance policies after the liberalization of the market a couple of years ago. In the first half of 2013, the insurance market grew by 2.45 percent while paid claims dropped by 8.9 percent compared to the same period in 2012.
The Albanian insurance market is overwhelmingly non-life oriented with around 87.7 percent while voluntary insurance accounts for 54.2 percent of total insurance premiums.
Some nine insurance companies operate in Albania, of which only INSIG remains wholly state-owned following unsuccessful privatization attempts.
