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Insurance market after the earthquake and the financial education Some issues to be addressed
The compulsory insurance increases the insurance penetration and we will obtain a percentage reduction in insurance and administrative costs, a reduction in reinsurance premiums, and a reduction in premiums per unit, to be paid by the citizens. by reinsurance companies, in accordance with the legal and regulatory framework in force. Referring to the number of reported damages, related to insured properties, it is noted that about 85% of them belong to the insured who have insured the property for loan purposes, while the rest are voluntary insured
Aranit MUJA
Actuary ALBANIAN FINANCIAL SUPERVISION AUTHORITY, AFSA
T
he year 2019 posed some challenges to the insurance market in Albania. Among them are the earthquakes of September 21st and November 26th. The November 26th earthquake, with a magnitude of 6.4 of Richter scale, was described by specialists as the most powerful of the last 40 years. These two earthquakes put the insurance market in front of high claims for damage compensations. Damage claims, which have been handled by the insurance companies so far, come approx. to 5,129 cases and amount to EUR 29 million. Out of this value, Albanian insurance companies operating in Albania will pay approx. EUR 1.8 million, as the difference will be paid 10
Bankieri
April 2020
The continuous financial education will raise the consumers awareness and empower them to make proper and informed decisions. From this point of view, greater results will be achieved through cooperation with all stakeholders, who operate in the insurance market.
properties, including state facilities, such as: universities, hospitals, etc. The Albanian Financial Supervisory Authority (AFSA), as a regulator for the insurance market, in co-operation with stakeholders, has drafted a new law that regulates the insurance market, which was adopted in
2014. From a risk management approach, the Law 52/2014 "On Insurance and Reinsurance", provides, inter alia, that insurance companies must reinsure all risks, which go beyond 10% of their solvency. With the Regulation no. 85/1, dated 30.09.2015 "On Reinsurance Criterion", as amended, AFSA has prescribed the quality of reinsurers, with which the Albanian insurance companies should sign insurance contracts in the Republic of Albania. The quality of reinsurers, that currently covering insurance companies, is A + and above, according to Standard & Poors, AM Best, Fitch, etc. For earthquake events, as being a low probability but with major impact event, AFSA has also adopted, by regulation, the methodology on the calculation of net retention of aggregate maximum coverage for earthquake insurance (NST), for insurance companies. From 2014 onwards, AFSA monitors the insurance market using a riskbased methodology. Looking at the insurance companies' indicators, it is noted that the insurance market has successfully coped with the damage claims, produced by the two earthquake events, by sharing the financial bill with reinsurance companies, as well. In order to continuously cover such risks with proper insurance, it is
