Albanians are against compulsory home insurance

Albanians are against compulsory home insurance

A survey conducted by "Monitor" on its website and on social networks has shown that the majority of participants are against the establishment of a mandatory housing insurance by law.

Based on the results of the survey, more than 57% of voters said that housing insurance against natural disasters should be voluntary.

The remaining 43% of voters expressed in favor of the other two alternatives, which provide for the establishment of mandatory housing insurance.

37% of the voters expressed themselves in favor of establishing a mandatory housing insurance against all natural disasters. Meanwhile, only approximately 6% of voters were in favor of having mandatory insurance only to cover earthquake damage.

The results show that only a small part of the participants are in favor of the alternative proposed by the Albanian government with a draft law from last year, which provided for mandatory insurance of housing, but only against earthquakes.

In August 2023, the Albanian government submitted for consultation a draft law that provided for mandatory insurance by law of all dwellings and commercial units located in residential units.

According to the bill, the compulsory insurance will be paid annually and the proceeds will go to the National Earthquake Fund, a legal entity in the form of a state-owned joint stock company. The draft law did not directly define a coverage limit amount and an insurance premium, but, according to it, the level of the premium should be calculated with an actuarial methodology, based on the earthquake risk model developed for Albania, which is approved by a decision of the Council of Ministers, after receiving the opinion of the Financial Supervision Authority.

In determining the insurance premium, among other things, the maximum possible loss for the specified return period, the expenses related to the ceding in reinsurance, as well as other operational expenses of the National Earthquake Fund, must be taken into consideration.

The initiative to establish a legally binding construction insurance was reactivated after the earthquake of November 2019, which caused damages of more than one billion euros. For the most part, the compensation was financed by the reconstruction program, which includes transfers from the state budget and contributions from foreign donors. The value of damages paid by private insurance companies was around 40 million euros, proving the low rate of voluntary housing insurance by Albanians.

According to data from the Financial Supervision Authority (AMF), last year the catastrophe property insurance market, expressed in terms of gross written premiums, was worth 2.1 billion lek or approximately 20 million euros. Expressed in per capita insurance premiums, every Albanian spends an average of 7 euros per year for property insurance against disasters.

Property catastrophe insurance premiums account for only 10% of gross written premiums in Non-Life insurance. The insurance figures are clearly very modest and in most cases it is estimated that this insurance is actually mandatory, because it is required by the banks to insure the properties that are left as collateral for bank loans.

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