The average price of compulsory car insurance increased by 7% for January

2025-02-27 07:38:00, Ekonomi CNA

The average price of compulsory vehicle insurance increased by approximately 7% in January of this year.

Statistics from the Albanian Financial Supervisory Authority (AMF) show that for January of this year, the average gross written premium for a TPL insurance contract amounted to approximately 19,500 lek (plus the 10% tax on the premium).

The average car insurance premium thus marked an increase compared to the average premium of less than 18,300 lek in January last year and overall with the average annual level of 18,100 lek, reported during 2024.

These figures clearly show that the launch of the application of the new system for determining compulsory vehicle insurance premiums has brought about an increase in prices for users, in average terms.

The Regulation “On the determination of risk factors included in the calculation of the premium for compulsory insurance products in the transport sector” entered into force at the beginning of this year and provides that in calculating the insurance premium, companies must apply several main risk factors, such as the history of claims, including cases where the cause of the accident is not listed in the insurance policy; the engine power of the vehicle; the age of the insured; experience in driving a motor vehicle; use of the vehicle by an entity or by an individual; the registration district of the vehicle; the age of the vehicle. In addition to the above factors, the regulation provides that insurance companies may also apply other risk factors, determined by them.

However, the system currently in use does not have a very detailed level of differentiation in some of the factors provided for in the regulation.

For example, the system sets higher prices for drivers aged 18-21, while not providing for further differentiation for older drivers. The system also does not take into account the experience of drivers, starting from the year they obtained their driving license.

Also, the differentiation by region consists only in the application of a lower coefficient for the regions of Berat, Dibër and Kukës, while for all other regions of the country the corresponding coefficient is the same.

Another factor that will determine premiums is the bonus-malus system or claims history. However, this element will begin to be implemented starting in 2026, based on the claims history of 2025.

After the media reported the increase in the price of mandatory vehicle insurance in January, the Assembly's Parliamentary Committee on Economy decided to convene a special session of the Board of the Financial Supervisory Authority, to report on whether the implementation of the requirements of the new regulation has been done correctly by insurance companies.

According to the law, insurance companies determine their own TPL insurance premium rates, but are required to notify the AFSA at least 30 calendar days before applying new premium rates.

Together with the notification of the application of new premium rates, insurance companies must file with the Authority the technical database, risk factors and actuarial assessments used for the calculation of insurance premiums, accompanied by the opinion of the company's authorized actuary, presented in the form of a written report.

The Authority, in order to supervise the activity of the insurance company, may order the review of new premium tariffs, if it finds that the database for compiling the insurance premium tables is not accurate, or the insurance company has not acted in accordance with the actuarial principles and the methodology used for the inclusion of risk factors determined by this regulation./ Monitor Magazine