Competition investigates banks for abuse of insurance position in selling life insurance for credit

2024-11-28 08:16:00, Ekonomi CNA

Competition investigates banks for abuse of insurance position in selling life

The Competition Authority decided this month to open a preliminary investigation against commercial banks, due to suspicions of abuse of the dominant position for the "life insurance for credit" product.

The Competition Authority's decision came after receiving a complaint to this effect.

Further, the Competition Commission, after assessing the existence of sufficient data that requires further investigation of how second-tier banks proceed with the distribution of this product, examined the competition secretariat's proposal to open a preliminary investigation in this market.

After evaluating the report presented by the competition secretariat, it was estimated that the percentage of the life insurance market share for credit does not even reflect the total market share that each of the life insurance companies owns.

According to the Authority, this may be a consequence of exclusionary behaviors with an anti-competitive character, causing customers (borrowers) not to be free to choose the company from which they want to get life insurance for the loan.

According to the Competition Commission, the introduction of banks into the life insurance market for loans may lead to restriction of competition in the sense of Article 9 of Law no. 9121, dated 27.03.2003 "On the protection of competition". For these reasons, the Competition Commission, with decision no. 1130, dated 07.11.2024, decided to open the preliminary investigation procedure in the life insurance market for loans.

The preliminary investigation covers the time period from November 7, 2021 to November 7, 2024. According to data from the Financial Supervisory Authority (AMF), for the 10th month of 2024, life insurance companies concluded almost 97 thousand debtor life insurance contracts .

The number of insurance contracts for this product has increased by 16.8% compared to the same period of the previous year.

For the ten months of 2024, the gross written premiums from the debtor's life insurance contracts reached ALL 1.32 billion or more than EUR 13 million. Compared to the same period last year, gross written premiums increased by 20.9%.

Debtor's life insurance is actually the main pillar of the life insurance market in Albania. Currently, it provides approximately 78% of the total number of contracts and approximately 80% of the total volume of gross written premiums.

The life product of the debtor is almost entirely related to the performance of the bank loan.

Most banks require life insurance for long-term bank loan contracts and in large amounts. Usually, these insurance contracts are required in real estate loans. However, there are some banks or financial institutions that may require life insurance for consumer loans as well. Life insurance is renewed every year, for the entire duration of the loan./ Monitor magazine