The insurance market is a very important part of our financial system. It includes the private and state owned companies which are in the business of insuring individuals and businesses. In order to benefit from the insurance coverage, individuals and businesses pay an insurance premium to protect themselves against specific events, and in case these events materialize, they are paid a pre-determined amount by the insurance company.
Life insurance is offered to individuals in the event of their death or another individual insured by the insurer through a life insurance policy.
Non-life insurance icnludes all insurance related services which are not included in life insurance policies (such as real estate properties, health insurance, car insurance, etc).
During the last 5 years, the ratio of paid claims vs premiums received according to the Insurance Categories has changed as shown below:
Source: FSA
Analysis and Comments: Open Data Albania
In 2010, in the non-life insurance market, the ratio of paid claims vs premiums received by the insurance categories was 30%. This is calculated as the ratio of paid claims (2.2 billion lek) vs premiums received (7.3 billion lek) during 2010. It must be noted that paid claims belong to 2010, however the insurance policies may have been issued prior to this year, and consequently the premiums received from these policies may belong to previous years.
Meanwhile, in the life insurance market, the ratio of paid claims vs premiums received by the insruance companies has been lower (8%). This is calculated as the ratio of paid claims (72 million lek) vs premiums received (848 million lek) during 2010. same argument goes here, as the premiums received from the relevant policies may belong to previous years.
During the course of these years, the highest level of the claims/premiums ratio belongs to 2006 (32%) in the category of non-life insurance, and to 2009 (11%) in the category of life insurance.
As far as insurance according to individual classes of non-life insurance, the highest ratio of claims paid belongs to the “automobile insurance”class, where this ratio was 76.5% in 2010. Whereas in the life insurance category the ratio is higher in the “debtor’s life insurance” class with 10.9% in 2010.
The insurance market is very important because it allows the risk transfer from one party to the other. Therefore the individuals and businesses who do not want to carry risk can transfer it to an insurance company. This is a key element for the well-functioning of economic and financial markets in a country.
Contributed by: R.E