Albania

Legislation & Supervision

Albania is a parliamentary democracy with a civil law system. Members of the Constitutional Court are appointed by the president with the approval of the Assembly. Insurance is regulated by the Albanian Financial Supervisory Authority (AFSA, www.amf.gov.al)

Major forms of Compulsory Insurance

• Third Party Automobile Liability
• Third Party Liability of the public transport sector
• Personal Accident for all employers in the mining sector
• Public Liability for Petrol and Gas stations

Non-Admitted Insurance

In principle, forbidden although sea-going Marine and Aviation are exempt from the rule. Special arrangements can be made for large risks or where local capacity is insufficient. Albania has applied for membership of the E.U. and will accept the principle of Freedom of Services.

Types of Insurance Restricted to Government Institutions

Export Credit.

State Involvement

The government has 100% ownership of one insurance company – INSIG (www.insig.com.al/index_EN.htm). Now the state insurance company is under the process of privatization. Also up to now the Albanian government with help of the World Bank is preparing to be involved in a project for Catastrophic Risk which will include Earthquakes and Floods.

Insurance Companies

In Albania there are both local and foreign insurers. The foreign insurers are able to establish branches and agencies. There are eleven insurance companies: nine non-Life and two Life and one is a composite (Insig – Life and Non-Life). All insurers must register with the AFSA and are strictly regulated. Most are members of the voluntary Albanian Insurers Association (www.albinsurance.org/en/index.htmlV).

Distribution Channels

The main non-Life distribution channel in Albania is formed of insurers and its agents. Life insurance is mainly handled by direct sales forces of insurers and banks. Recently, licensed intermediaries were also approved. There is only one international broker licensed and there is no Brokers’ Association; most are members of the voluntary Albanian Insurers Association (www.albinsurance.org/en/index.htmlV).

Currency Restrictions / Exchange Controls

Foreign exchange may be carried out by all commercial banks.

Policy Wordings & Rates / Tariff Controlled

All wordings and tariff rating must in theory have been approved by the AFSA. Insurers are required to obtain supervisory approval for policy wordings or rating tariffs. There are restrictions on the use of foreign wordings; however these can be put to the supervisory authorities for approval.

Policy Language

Most of the policies are written in Albanian language. Albanian is mostly used but foreign languages may be used with approval, especially for international clients.

Policy Currency

The most frequently currency is the Leke (ALL) but the Euro is sometimes is used (1 EUR = 140 ALL or 1 USD- 110.2 ALL).

Policy Period

Annual, although for larger risks multi-year policies are available. Longer terms policies are available for certain classes but are not common.

Cancellation Provisions

Any time before renewal date. Usually 30 days written notice prior to expiration days’ notice by either party.

Premium Taxes and Charges

Paid by the insured: VAT - 20% on the net premium and 1.5% authority tax for international programs.

Brokerage Commissions

Vary greatly. Average commissions range from 10% - 20%.

Broker of Record Letters

Sometimes required. A recognized practice which applies for new clients.

Reinsurance

There is one only company which is licensed to carry out Reinsurance activities. Anyway Albania is a small country and most of the companies use foreign reinsurers. Albanian insurers use both types of reinsurance (proportional and non-proportional) for their treaties. According to Albanian insurance law, reinsurance companies must be rated BBB+ or above.

Pooling Facilities

Albanian DMTPL Pool which includes 5 Albanian Insurers. The Albanian Government is preparing to be involved in a regional Pool for catastrophic risks.

Local Natural Hazards

Albania is in a relatively active seismic zone. The Earthquake hazard is highest along the coastal area and in the northern part of the country. Flood risk is highest in the low-lying areas in the north and west parts of the country.

Non-life (P&C) Insurance Market

The majority of premium income relates to non-life business. The volume of this market is €53 million which represents 90% of the insurance market.

Life Insurance Market

There are three Life insurance companies offering a range of life and savings products. The market represents €7 million or 10% of total insurance market.

Healthcare

The health system in Albania is mainly public. The welfare state covers medical expenses and disability. Work-related accidents and health benefits also fall under the State healthcare program, but some companies offer also Health insurance for higher limits.

Pensions

The main schemes in Albania are state schemes. Recently private schemes have also been licensed. Most employers provide facilities for employees to contribute to state schemes.

Named Perils

Standard fire perils include fire, lightning, explosion and aircraft. Earthquake, flood, storm / tempest, burst water pipe, riot/civil commotion, windstorm / hurricane, vehicle impact, weight of snow / avalanche are available for an additional premium.

All Risks

Infrequent.

Coinsurance

Infrequent and then only for larger risks.

Basis of Indemnity

• Buildings, Contents, Machinery & Equipment: replacement value
• Stocks: production costs

Business Interruption

Fairly infrequent; it is sometimes required by the large industrial / commercial risks and especially international clients. Calculation method BI sum insured: gross profit (net profit plus standing charges). Forms usually follow U.K. Loss of Profits wording for global programs.

Discount for fire protection equipment / systems

Negotiable – available up to maximum discount of about 10-20%.

Terrorism

No special legislation to be complied with.

Boiler & Machinery / Machinery Breakdown / Engineering

Usually covered by Property policies and follow U.K. and German wordings.

Construction

Rarely requested. U.K. and German forms available.

Bonds / Surety

Very limited availability.

General / Public Liability

Public liability policies are based on London market wordings. Policies are written on both a Claims Made basis and Occurrence basis. Policies can sometimes be extended to include Professional Indemnity, Product Liability and Workers’ Compensation / Employer’s Liability.

Products Liability

Products liability policies are only written for exporters and are always subject to international facultative reinsurance support Policies usually written on an Occurrence basis but Claims Made is available.

>Workers’ Compensation / Employer’s Liability

Statutory coverage is provided by the social security system Separate cover is not a mandatory, but sometimes international clients require to be insured for low limits.

Professional Indemnity (Errors & Omissions)

Very limited availability.

Directors & Officers Liability

Not available locally.

Automobile / Motor

Compulsory Limits

• Bodily Injury: ALL 200,000,000 (€1,500,000)
• Property Damage: ALL 20,000,000 (€150,000)

Comments

Coverage applies to the Insured and any licensed individual driving with the Insured’s permission. Passengers are deemed to be Third Parties.

Personal Accident

Widely available.

Medical Expenses

Limited cover from the state Healthcare program. Basically the only cover available is for expatriates and is arranged by their employers abroad.

Disability

Limited cover from the state Healthcare program. Basically the only cover available is for expatriates and is arranged by their employers abroad.

Crime / Fidelity

Very limited availability.

Marine / Inland Transit

Marine Hull consists entirely of P&I policies. Insurers have been unable to obtain reinsurance for hull risks, all of which are either uninsured or written in the Greek or Italian markets. Marine Cargo: almost all imports are dispatched on a CIF basis. About 75% of exports are sent to Greece or Italy and are transported by road or ferry. Albanian truckers accept no liability for goods in their care, custody or control. Exports are mostly dispatched on a FOB basis and insurance is arranged by the customer abroad.

Other Classes of Insurance readily available

Catastrophic risk, Contract Works.