[ad_1]
The reduction in the prices of compulsory insurance of assets at the end of last year has given a significant impact on the number of policies sold by insurance companies.
Statistics from the Financial Supervisory Authority (FSA) show that for November 2021 the number of motor third party liability insurance (TPL) insurance contracts reached 43,459. Compared to November 2020, the number of contracts entered into has increased by almost 25%.
This was the highest annual growth rate of insurance contracts since March 2021. However, in March, the increase in the number of contracts mainly reflected the differences caused by the drastic closure of the economy in March 2020, after the explosion of pandemic. Restrictions on movement prevented most drivers from renewing their compulsory insurance policy and caused a sharp drop in the number of contracts. The high growth in March this year simply reflects a return to normalcy compared to a closing period. On the contrary, the extremely high increase in the number of contracts in November this year seems to be a result of the drastic reduction of prices applied by non-life insurance companies.
At the beginning of November last year, the prices of compulsory insurance of assets fell sharply in recent days. According to surveys conducted by Monitor at sales agents, the prices of compulsory insurance in this period went down to 13 thousand ALL. This amount is almost 30% less compared to the official price written on the insurance policy, while previously the maximum reduction against the policy price could reach up to 15%. The main mechanism through which the reduction of the insurance price is carried out is the commission that the companies offer to the sales agents. According to sources, the commissions in November reached near the level of 45%. The commission at the rate of 45% means that for an insurance policy with an official price of 19 thousand ALL, the company receives only about 10,500 ALL. The difference of 8500 ALL is left to the agent, who on this basis negotiates the sale price with the buyer, applying the reduction that he deems reasonable. The situation stabilized only in December, when TPL insurance prices returned to previous levels.
Insurance companies did not formally comment on the reasons that caused the price cuts. However, experts say that this may have been caused by the increase of sales commissions by individual companies, a move that has forced other companies to adapt, in order not to lose market share.
One reason that may have prompted this move is the adoption of the new regulation “On Mediation Commissions”, in which the AFSA sets ceiling levels from 2022. Starting January 1, 2022, non-life insurance companies will not may give intermediation commissions higher than 20% of the gross written premium. After one year, on January 1, 2023, the ceiling commission will be reduced to 18% of gross written premium. The temporary price reduction can be interpreted as an attempt to gain market share in this product, before the entry into force of the above regulation.
Internal motor insurance for liabilities to third parties is by far the main product in the Albanian insurance market. At the end of 11 months 2021, the gross written premiums from this product accounted for 56% of the non-life insurance market, for a total value of about ALL 9 billion. / Monitor
top channel
[ad_2]
Source link