Albania to revise car insurance pricing

Albania to revise car insurance pricing

Albania’s Financial Supervisory Authority is revisiting a draft regulation aimed at differentiating mandatory car insurance prices. The draft regulation, first introduced in 2021, proposes a new approach where insurance premiums will be determined by the vehicle’s age, engine power, registration area, type (electric or fuel-based), as well as the owner’s age, driving experience, and accident history. 

Why is it important

The new regulation aims to establish a more tailored pricing structure, which could incentivize safer driving habits, reduce the frequency of accidents, and provide fairer insurance rates to vehicle owners. The car insurance sector dominates the Albanian insurance market, accounting for 66% of the total market from January to July this year, according to data from the Financial Supervisory Authority.

In 2021, a law was passed that allowed insurance companies to apply different rates for drivers with a history of frequent accidents. However, at the time, insurance firms argued that the initiative was premature for the Albanian market, citing concerns over market readiness and the need for broader regulatory support.

Details

Vehicle insurance constitutes a significant segment of insurance portfolios, and recent data highlight the growing financial burden on insurance providers. In the first seven months of this year alone, insurance companies paid out 3.4 billion ALL in compensation for accidents, representing a nearly 21% increase compared to the same period last year. 

The revised regulation aims to implement a pricing system that is not only fairer but also encourages responsible driving by reflecting the specific risks associated with each driver and vehicle. Factors such as a driver’s accident history, the type of vehicle they own, and their driving experience will directly influence their insurance costs.

What’s next

The Financial Supervisory Authority will continue working on refining the draft regulation to better align it with market demands and international best practices. This move is anticipated to reshape the car insurance sector in Albania, making it more responsive to individual risk profiles and enhancing overall market sustainability.

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