Mandatory home insurance will cover not only earthquakes, but also floods

2026-02-03 07:17:48, Ekonomi CNA

The Albanian government has again amended the draft law on mandatory housing insurance, including floods in the insured risks, in addition to earthquakes.

The draft law has been renamed "On Compulsory Insurance of Housing against Earthquakes and Floods" and its purpose will be to cover financial losses suffered by the insured due to damage to the insured residence caused by earthquakes and floods.

The inclusion of floods will expand the risks insured by the mandatory scheme, but is also expected to bring a higher insurance premium compared to the previous model, which only mandated earthquake insurance.

Even in the updated version of the draft law, the establishment of a National Fund for Mandatory Earthquake and Flood Insurance is foreseen, which will provide and administer the mandatory scheme and will insure the apartments, but also the sections located within the apartments that are used as units, offices or for other similar purposes.

The National Fund for Compulsory Earthquake and Flood Insurance shall be established as a public legal entity, organized in the form of a joint-stock company, pursuant to this law and the law in force for traders and commercial companies. The maximum insurance amount shall be determined by decision of the Council of Ministers, upon the proposal of the Minister responsible for Finance.

The methodology for determining the premium for compulsory insurance of homes against earthquakes and floods, the terms, and the classification of homes based on risk, will be calculated using an actuarial methodology, based on the relevant earthquake and flood risk model developed for Albania, which is approved by decision of the Council of Ministers, upon the proposal of the Minister responsible for Finance, after receiving the opinion of the Financial Supervisory Authority.

The Council of Ministers will determine the competitive criteria for the selection of public and private agents and insurance companies for management, the degree of their involvement, the distribution or administration of insurance contract sales, the relevant commissions and the conditions of cooperation.

The compensation, depending on the degree of damage and the amount of compensation, must be paid within three months, starting from the moment of full completion of the relevant documentation. The draft law has also expanded the mechanisms for enforcing the insurance provided for therein.

Persons requesting registration, change of residence registration or receipt of other cadastral services at the state institution responsible for the cadastre are required to submit in advance a valid contract for compulsory insurance of their residences against earthquakes and floods, connected to the Fund, in order to benefit from these services.

The absence of such a contract makes it impossible to receive these cadastral services. Persons who do not enter into the legally binding contract will not benefit from electronic services through the e-Albania government portal, but the services that will be expressly limited will be determined by decision of the Council of Ministers.

Also, they will not benefit from services from the National Business Center. Meanwhile, private insurance companies will not be allowed to conclude voluntary insurance contracts for earthquakes or floods for a dwelling within the meaning of this law, which has not previously concluded a mandatory insurance contract with the National Fund. /Monitor