Almost 91% of natural catastrophe insurance premiums are concentrated in the Tirana region. Data from the Insurance Geography report, by the Financial Supervisory Authority (AMF), shows that property insurance continues to have a very high degree of concentration in the capital, while the rest of the country has negligible coverage against natural disasters, fire or other property damage.
Last year, insurance premiums for fire, natural disasters, and other property damage totaled 2.61 billion lek, or about 26.5 million euros. This amount translates to just 11 euros in insurance premiums per year per capita, or about 35 euros per family.
In addition to the differences in economic development between Tirana and the rest of the country, the concentration of this product in the capital is also closely related to the real estate market and the performance of bank credit.
Awareness of voluntary property insurance against natural disasters is very low and this product is dominated by insurance, de facto mandatory by banks, for properties that are left as collateral for bank loans.
Given that a significant portion of real estate purchases are financed with credit and given that the property market is dominated by Tirana, catastrophe insurance premiums are also highly concentrated in Tirana. A reason that further increases the concentration of premiums in Tirana is the value of the insured properties. Given that the value of the property or insured liability is higher in Tirana, then insurance premiums are also higher.
Measured as the number of contracts, the concentration of this product in Tirana is somewhat lower, with around 80% of the total insurance contracts. Last year, around 58 thousand policies for property insurance against catastrophes were sold in Albania, of which more than 46 thousand belonged to the Tirana Region.
If we were to calculate all property insurance policies a priori as home insurance, it would result that in Albania, at best, no more than 5.4% of the total number of homes are insured (referring to the 2023 Census).
In July, the Albanian government returned for public consultation the draft law on mandatory earthquake insurance for homes. It establishes the obligation to insure all homes in the country, with a few exceptions (e.g. houses built of clay, adobe, reed or buildings with mobile or temporary locations).
The insurance scheme will be administered by a special entity with state capital that will be established for this purpose, the National Fund for Compulsory Earthquake Insurance.
The amount of insurance will be determined by a decision of the Council of Ministers, while the insurance premium to be paid by homeowners will be determined by the Earthquake Fund, after obtaining the consent of the Minister responsible for Finance. For the needy, the insurance premium will be financed from the state budget. / Monitor
