Editorial The earthquake...and its aftermath Prof. Asoc. Dr. Elvin MEKA

The earthquake...and its aftermath EDITORIAL

The earthquake’s aftermath taught us that the insurance industry and banking sector must (and in a certain way, are bound to) cooperate and work together to develop the bancassurance concept and practice, as part of banking industry’s daily activity.

Prof.Asoc.Dr. Elvin MEKA 1 Editor-in-Chief

The first hours of November 26th and the dramatic moments we felt during the earthquake, the strongest within a 40-year range since 1979, reminded us that the earthquake of September 21st was just the prelude of a different and complex social and economic period, we were just entering into. The earthquake claimed the lives of many and produced a gargantuan bill for the government, insurance companies, businesses and individuals.

The banking sector in Albania was positioned in the first line of relief for all affected by the earthquake, by making proper monetary and material donations, individually and through AAB, as well as taking supportive decisions to facilitate transfers and accommodating requests from different borrowers, in terms of restructuring loan installment payments. It should be noted that, banks in Albania experienced limited consequences, in terms of financial damages caused by the earthquake, given the proper insurance coverage applied on their loans and the respective collaterals. Fortunately, banks scored minimal damages to their operational activity, thanks to their effective business continuity plans and immediate reaction towards the situation in place.

On the other hand, the insurance industry got the life’s hit from both events, by facing an augmented damage payback and a mountain of bureaucracy and paperwork, as never seen and experienced before. Unfortunately, but in the same time quite positively, the earthquake(s) revealed loopholes and deficiencies, the financial system in general and the insurance industry in particular have, in terms of insurance contracts setup, and in a greater perspective, the level of financial literacy, the general public possesses, regarding the insurance products. The earthquake’s aftermath taught us that the insurance industry and banking sector must (and in a certain way, are bound to) cooperate and work together to develop the bancassurance concept and practice, as part of banking industry’s daily activity. Also, it unfurled the down-to-earth level of general public’s financial education about insurance industry, its role and relevant products, and the urgent need for proper intervention, in terms of ensuring an effective and useful financial education for all.

Additionally, the recent dramatic developments, related to Covid-19 pandemic and the actual economic lockdown have just been added to the above challenges, the banking sector and insurance industry must face, from now and on. The complex situation that prevails actually will, unavoidably, impact the banking activity, up to the point of calling for important strategic decisions. Nevertheless, all we have to do for now is to build up confidence within ourselves, within our banking institutional standing, our professionalism and professional courage, by crushing fear and uncertainty. As the US President Franklin D. Roosevelt said in his First Inaugural Address: “…the only thing we have to fear is fear itself…” So, it’s time for banks to convert threats to opportunities and weaknesses to strengths; it’s time to work for S-O strategies, within the principle of the wellknown SWOT Analysis!

1 Dean of Faculty of Economy, Business & Development, European University of Tirana, UET