2014年-世界发展银行全球_Financial_Sector_Assessment_Program_Update_-_Albania___Insurance_Core_Principles_60页_1mb

Albania Insurance Core Principles (ICP) Observance Assessment Summary

Core Content

This report is part of the 2013 Financial Sector Assessment Program (FSAP) conducted by the IMF and World Bank in collaboration with the Albanian Financial Supervisory Authority (AFSA). It evaluates Albania's compliance with the Insurance Core Principles (ICP) established by the International Association of Insurance Supervisors (IAIS). The assessment highlights both the current state of the insurance sector and the challenges in its supervision.

Main Findings

Insurance Market Overview

• The insurance sector in Albania is small and underdeveloped, with gross written premiums amounting to 0.66% of GDP in 2012.
• Insurance penetration has been low, with €20 per capita insurance consumption, significantly below the levels in Southeastern and Central Europe.
• The market share is dominated by 11 insurers, with five Austrian subsidiaries accounting for 63.4% of non-life premiums and 51.2% of life insurance premiums.
• Life insurance constitutes 10% of total premiums, with credit life insurance being the main product. However, life insurance growth is limited due to economic challenges and lack of public awareness.
• Non-life insurance makes up 90% of the market, with MTPL (Motor Third Party Liability) being the largest segment at 56.9% of non-life premiums.

Market Performance

• The non-life insurance sector has shown negative underwriting performance in four out of six years, with a significant underwriting loss in the first half of 2013.
• Operational expenses account for over 70% of premiums, which is higher than regional averages.
• The combined ratio (claims + expenses) has been above 100% in most years, indicating unprofitable operations.
• The claims ratio is 50% in 2013, but this is not indicative of good claims performance due to the high expense ratio and low premiums.

Solvency and Liquidity

• The market solvency margin ratio is above 300%, suggesting a highly solvent market overall.
• However, individual insurers may not meet solvency requirements if technical provisions and premium pricing are not adequate.
• The liquidity ratio for the non-life market is around 46.9%, largely due to high cash reserves from state-owned insurers.

Insurance Supervision Challenges

• The AFSA is the sole authority for insurance regulation and supervision in Albania.
• Despite its nominal independence, it faces significant constraints, including lack of real independence, limited financial resources, and acute shortage of qualified personnel.
• The supervisory framework is rule-based, not risk-based, leading to ineffective oversight and lack of prioritization in inspections.
• The AFSA has limited capacity to assess technical provisions, claims performance, and corporate governance.
• There is no legal mandate or special unit for AML/CFT supervision or fraud detection in the insurance sector.

Key Issues Identified

• Unchecked price competition has led to negative profitability and increased risk exposure.
• Inadequate reserving practices for uninsured claims (especially MTPL) have created reputational risks and potential solvency issues.
• The Compensation Fund for uninsured claims is underfunded, with a shortfall of EUR 6.5 million.
• Catastrophe risk, particularly earthquake risk, is significantly undermanaged, with insurers exposed to large liabilities due to loan collateral.
• The AFSA lacks the technical capacity and legal authority to effectively supervise the insurance sector.

Recommendations

Institutional and Legal Reforms

• Empower AFSA to sponsor and present new insurance laws and amendments to the existing ones.
• Exempt AFSA from the Law on Public Administration to ensure independence.
• Pass amendments to the AFSA Law to allow competitive compensation for technical staff.
• Reorganize AFSA to create dedicated technical positions for insurance supervision.
• Enable AFSA to retain independent insurance consultants to address shortages in actuarial and IT expertise.

Regulatory and Operational Improvements

• Enact the pending Insurance Law and MTPL insurance law to align with IAIS standards.
• Introduce risk-based requirements for claims performance and solvency.
• Develop internal risk rating systems for insurers to allocate supervisory resources more effectively.
• Create detailed inspection manuals for thematic regulatory inspections.
• Implement new regulations for life insurance and earthquake insurance.
• Establish minimum reserving standards for MTPL insurance and ensure proper funding of reserves.
• Introduce a national earthquake insurance program for homeowners to manage catastrophe risks.

Key Information

• Insurance Penetration has remained low, decreasing from 0.69% in 2009 to 0.66% in 2012.
• Non-life insurers have a high expense ratio, leading to unprofitable operations.
• Uninsured claims are a major risk for insurers, with significant liabilities.
• Earthquake risk is undermanaged, with insurers facing high exposure.
• AFSA is overburdened and under-resourced, limiting its supervisory effectiveness.
• Legislative reforms are necessary to align with IAIS ICPs and improve market stability.

Conclusion

The Albanian insurance market is underdeveloped, low in penetration, and prone to instability due to weak supervision, price competition, and inadequate reserving practices. The AFSA has the responsibility for supervision but is constrained by legal and resource limitations, which hinder its ability to ensure effective oversight and market stability. Comprehensive reforms are essential to improve the regulatory framework, enhance supervision, and promote sustainable growth in the insurance sector.