Euroization of the insurance market suffered a slight decline last year

2024-03-20 07:57:39, Ekonomi CNA

Euroization of the insurance market suffered a slight decline last year.

According to data from the Financial Supervisory Authority (AMF), at the end of 2022 the share of gross written premiums in Euros against the total decreased to 31%, from approximately 32% at the end of 2022.

However, the decrease in the share of gross written premiums in Euro is mainly the result of the exchange rate. Last year, the Euro suffered the highest historical devaluation in the exchange rate with the Lek. At the end of the year, the drop of the Euro-Lek exchange rate was more than 9%, but at certain moments the annual drop reached up to 14%.

The weight of premiums written in Euro against the total for the Non-Life Insurance activity has suffered a slight decrease of about 0.7% compared to the end of 2022, going down from 32% to 31.3%.

A decrease in the weight of premiums written in Euro compared to 2022 has been experienced by Civil Liability Insurance with a decrease of 13.5% (from 57.6% to 44.1%), followed by Property Insurance with a decrease of 2% (from 55.5% to 53.5 %), Accident and Health Insurance with a decrease in weight by 0.8% (from 63.5% to 62.7%) and Motor Insurance with a decrease in weight by 0.3% (from 24.5% to 24.2%).

While the classes that have shown the most pronounced increase in premiums written in Euro compared to a year ago are Engineering Insurance with an increase in weight by 19.2% (from 63% to 82.2%), Guarantee Insurance with an increase in weight by 5.6 % (from 18.5% to 24.1%), Cargo Insurance in Transport with an increase in weight by 4% (from 58.9% to 62.9%), while Marine and Aviation Insurance shows a slight increase, respectively by 0.4% (from 5.6% to 6%) and 0.3% (from 0% to 0.3%).

In the Life insurance market, the weight of premiums written in Euros against gross written premiums in total has marked a slight decrease of about 2.3%, reaching 29.2%, from about 31.5% that had been at the end of 2022 .

With a decrease in the share of premiums written in Euro, Student Life Insurance is presented with 72% (from 100% to 28%), Combined Life Insurance, with a decrease in share by 10.3% (from 26.4% to 16.1%), followed by from Debtor's Life Insurance with a decrease in weight by 2.4% (from 23.8% to 21.4%) and from Group Life Insurance with a decrease in weight by 1% (from 4.5% to 3.5%).

While the classes that have shown the most pronounced increase in premiums written in Euro compared to the previous year are Life Insurance with variable elements, with 27.8% (from 43.9% to 71.7%), Cash Plan Insurance with an increase in weight by 27.1% (from 35.1% to 62.2%), followed by Life Insurance with savings elements with an increase in weight by 0.2% (from 92.7% to 92.9%).

Euroization of the insurance market suffered a slight decline last year

AMF notes that some of the insurance products are quoted in foreign currency for objective reasons.

Such are, for example, some compulsory motor insurance products, such as border policies and green cards. The Green Card product is an international insurance product, which is issued in the euro currency, since the obligations that arise to the insurance company outside the territory of the Republic of Albania for payment of compensation from this insurance are in Euros.

The border policy is issued at the border crossing points during the entry of vehicles with foreign license plates into the territory of the Republic of Albania, and the payment of the policy premium in the local currency would complicate the process of equipping the consumer with this insurance policy.

Likewise, some of the main products of the insurance activity, such as property insurance with commercial banks as beneficiaries or life insurance of the debtor, are closely related to the currency of the loan. The currency in which the loan is disbursed also dictates the currency of the policy issue, due to the need to recover in the same currency the value of the obligation, in the event of the occurrence of the insurance event.

Even in the next analysis of the progress of the euroization indicators, the AMF assesses that the current level of currency use in the markets supervised by the AMF is at generally low levels and dictated by the activity profile of the supervised institutions.

The Ministry of Finance and Economy, the Financial Supervision Authority and the Bank of Albania signed in April 2017 a Memorandum of Cooperation "For the expansion of the use of the national currency in the financial system and in the Albanian economy". The three institutions committed to take actions to reduce the level of use of foreign currencies in the economy, according to the sectors they oversee or monitor./ Monitor.al