Impact Story
Insurance Sector Development in Southeast Europe
The Albanian Financial Supervision Authority, in cooperation with the Ministry of Finance and Economy and the World Bank, organized an international conference “Development of the Insurance Sector - Opportunities and Challenges in Southeast Europe” in Tirana on October 18, 2023. This event brought together about 150 participants, including high-level representatives of the Albanian Government, international financial institutions, financial supervisory authorities, and market players, both local and international.
The conference was supported by the Finance for Development (F4D) Umbrella Program administered by the World Bank and the World Bank’s Crisis and Disaster Risk Finance team.
Why Insurance?
Insurance provides individuals, farmers, businesses, and governments with a mechanism to manage and transfer risk. It helps protect against unexpected events such as accidents, natural disasters, or health issues and its role is growing with increasing impact of the climate change on livelihoods and economies. With insurance coverage, individuals and businesses are better prepared to deal with financial impact of these events and recover more quickly. Insurance plays a crucial role in promoting economic growth. Individuals and companies with insurance coverage are more likely to take risks and invest in new ventures. Insurance also contributes to social welfare by providing financial support to individuals and families through health and life insurance during difficult times.
Insurance companies are essential investors in the economy. They collect premiums from policyholders and invest these funds in various long term financial instruments such as stocks, bonds, and real estate. This investment activity helps stimulate economic growth, deepen the capital markets and provides capital for businesses and infrastructure development.
Expanding Insurance in Albania
Albania’s insurance sector has undergone positive developments in recent years. The market recovered quickly post-COVID-19 by marking significant growth in 2021 and 2022 and improving its key financial indicators. Macroeconomic factors are favorable for further development in insurance demand. Nevertheless, the insurance sector in Albania remains small in absolute terms and, in comparison, with the rest of the financial industry and peer countries in the Western Balkan region. It represents only 2.2 percent of financial sector assets.
Good regulation and supervision regimes are essential for developing the insurance sector. Upgrading regulatory framework of the insurance sector in Albania over the recent years through the support of development partners including the World Bank and Swiss Government, has accelerated its development. Recently regulatory developments have focused on making the insurance market more stable and pertinent in a country applying for EU membership.
Key Issues Discussed
Disaster Risk Management: Moderated by Tatiana Skalon from the World Bank, this panel focused on disaster risk insurance models, best practices, and their applicability in Albania and Southeast Europe. It highlighted Albania’s vulnerability to natural disasters, emphasizing the importance of insurance in mitigating economic and social impacts. Olivier Mahul, Practice Manager at the World Bank, leading the Disaster Risk Financing and Insurance Program, set the stage with a presentation on catastrophe insurance and lessons learned from global experience.
Insurance Sector Development: Moderated by Peter Braumüller of the European Insurance and Pensions Authority (EIOPA), this panel discussed the progress and challenges in developing the insurance sector in Southeast Europe, including aligning with European Directives and international standards.
Agricultural Insurance Challenges: Moderated by Klime Poposki, Chairman of the Board of Directors of Winner Insurance North Macedonia, this panel explored models, opportunities, and challenges in agricultural insurance, vital for a sector prone to natural events and climate change impacts.
This program is supported by Finance for Development (F4D) and the Risk Finance Umbrella Program.
F4D is the World Bank’s main donor financing, partnership, and knowledge platform, aimed to improve the capacity of low- and middle-income countries to develop deep, inclusive, efficient, and resilient financial systems.
The World Bank’s Crisis and Disaster Risk Finance (CDRF) global team, part of the Equitable Growth, Finance and Institutions (EFI) Practice Group, helps client countries manage financial risks associated with disasters, climate shocks, and crises. Through analytical, advisory, financial, and convening services, it assists vulnerable countries in transitioning from crisis responders to proactive risk managers.