Insurance law and regulation in Albania

The insurance industry in Albania has a relatively recent history. Prior to 1990 there were no specialised insurance companies operating in Albania. After the so-called “liberalisation” of the market in 1999, the insurance market was subject to material changes with reference to the quality of the services and selection of insurance products. Today, many international insurance companies are active in the Albanian market, mostly by way of acquisition of the existing local insurance companies.

An insurance business may be set up in two ways. The first option is to duly incorporate a joint stock company in Albania. Prior to incorporation it is essential to obtain initial incorporation approval by the Insurance Supervisory Authority (“AMF” – Albanian acronym), the local regulator. This procedure may take up to six months and usually involves professional assistance, since the required documentation to be submitted is relatively vast and the language is in Albanian. Failure to comply with the requirements will mean that the insurer cannot be registered in the Trade Registry. Such companies should also meet certain financial requirements.

The alternative method for a foreign insurance company is to open and register a branch in Albania. The abovementioned procedures also apply. Additional information, however, is required such as data concerning the financial situation of the mother company, and its last three year audited financial statements, the future strategy of the parent company and the development of the insurance market in the country where the parent company has been incorporated. The branch can only perform the same activities as that of its parent company.

Incorporation and registration procedures at the Trade Registry usually take 24 hours. Following the incorporation, the insurer files a written request (including the relevant documentation) with AMF to be granted a licence to carry out insurance activity. This procedure takes up to two months from the date the request is filed. The AMF may extend the term by up to three months. The insurer licensed to provide MTPL services shall become a member of the Albanian Insurance Bureau.

Following Albania’s application for EU membership, additional legal amendments are necessary to adapt local law to EU regulation. In fact, a new law on insurance or reinsurance (52/2014) was implemented by the Parliament on 22 May 2014.

Prior to executing an insurance agreement, the insurance company shall inform the insured/policyholder of the merits of their insurance products, the special and general terms and conditions of the agreement, the expenses and profits of the insurance contract, as well as of the circumstances which are necessary to assess the risk which is known to the insured or policyholder, or under the circumstances could have not remained unknown by them.

Where, following the execution of the insurance contract, it emerges that the insured has intentionally provided inaccurate/misleading information in the request or documents submitted by them based on which the insurance contract has been executed, the insurer, within three months after it becomes aware, is entitled to:

• amend the amount of insurance premium, insurance amount or insurance period;
• terminate the insurance contract, if having been aware of the correct information, it would not have entered into the contract. In such a circumstance, the insurance premium related to the termination period, does not need to be returned to the insured.

The insurance contract is invalid if, before the expiring of the same, the risk assured did not exist or has ceased to exist.

The insurance agreement envisages the notification term, as well as the consequences for late notification. The policyholder is obliged to properly notify the insurer on the occurrence of the insured event within the due term. The insurer may refuse to indemnify the insured or may require damage compensation should the insurer suffer damages for late notice.

Pursuant to the insurance agreement, the insured or the life-insurance beneficiary is usually entitled to raise direct claims against the insurer. However, third parties affected may enforce the same right. Should the insurance agreement be executed for third-party liabilities, the latter may raise a direct claim against the insurer for the suffered damages due to the activities of the insured covered by the policy.

Regarding insurance agreements, Albanian law does not envisage particular procedures for loss adjustment. Such provisions might be incorporated and drafted accordingly in the insurance agreement.

Albanian law does not differentiate between types of insurance agreements with respect to the limitation period for claims. The Albanian Civil Code envisages that the limitation period for payment of compensation under the insurance contract is two years starting from the date when the insured event occurs or when the insured/third party becomes aware of the insured event.

Albanian law does not explicitly regulate policy triggers. Usually the policy is triggered by the occurrence of the insured event. However, the law does not limit parties’ rights to agree on other policy triggers as long as it is in compliance with Albanian law. The other types of policy triggers are less common than occurrence-based policies. MTPL policy can only be triggered by the occurrence of the insured event.

This policy is not envisaged by Albanian law.

Albanian law is currently silent on this, but within the insurance market, many insurers offer coverage for civil fines and penalties, mainly in two forms:

i.Professional Liability Insurance.
This insurance covers the insured in the event of damage caused to third parties due to the exercise of his/her professional activity.

ii. Product Liability Insurance.
This insurance covers the activity of manufacturers, indemnifying consumers for damages caused by their products.