Developments of the Albanian Insurance Market in the Framework of the MTPL Insurance Liberalization
(International Journal of Business, Economics and Management Works)
Vol. 4, Issue 11, PP. 39-52, November 2017
Liberalization, MTPL Insurance, Bonus-Malus System, Efficiency of Bonus-Malus, Markov Transition Matrix
Aim of this paper is to present the challenges and developments of the Albanian insurance market during the process of its liberalization. Consequently the insurance market has shown instability with regard to the fluctuations of the premium levels. A fair pricing based on the market conditions is one of the biggest challenges of the albanian insurance market. By means of an econometric model, the correlation between the liberalization process and profitability of insurance companies has been shown. This paper discusses also the efficiency of the Bonus-Malus System, which is expected to be implemented in Albania in 2018 in order to stabilize the insurance market. In this regard the elasticity according to Loimaranta (1972) is calculated for Albania. As the Bonus-Malus System is already implemented in other region countries, the paper suggests that in addition to the advantages this system can bring, there is also the risk of the phenomenon known in the literature as “ Hunger for Bonus”, according to which, people tend to not report the claims. Under such conditions the result would be a lower claim frequency deriving from the non-reporting of claims and not from the implementation of the Bonus-Malus System. The implementation of the Bonus-Malus system must be accompanied by an increase of anti-fraud measures.
Patris Poshnjari: University of Tirana, firstname.lastname@example.org
Patris Poshnjari, "Developments of the Albanian Insurance Market in the Framework of the MTPL Insurance Liberalization" International Journal of Business, Economics and Management Works, Vol. 4, Issue 11, PP. 39-52, November 2017.
-  Albanian Financial Supervisory Authority, “ Supervision report”, 2006-2016, Tirana, Albania
-  Albanian Financial Supervisory Authority, “Annual report”, 2006, Tirana, Albania.
-  A. Heikes, “The pricing effects of european union insurance”, 2006, honors projects, paper10. http://digitalcommons.iwu.edu/busadmin_honproj/10.
-  B. Tomeski, “Development of motor third party liability Insurance. Market in terms of changing regulation”, in Procedia Social and Behavioral Sciences 44, 2012,pp. 200 – 209.
-  Client Newsletter GrECo International Holding AG, “Market UPDATE. GrECo JLT´s biannual newsletter on market developments in CESEE”, no.1, 2015.
-  C. Constantinescu, “Bonus Malus systems in car insurance. Croatian actuarial conference, 2017, Zagreb.
-  F. Baione, S. Levantesi, M. Menzieti, “ The development of an optimal Bonus-Malus system in a competitive market ”, in Astin Bulletin, Vol.32, No.1, 2002, pp.159-170.
-  G. Sharku, S. Shehu,”Concentration of the albanian insurance market”, Economica management, 2016, issue 3
-  G. Whitehead, “No claim discount or bonus malus system in Europe”. https://www.casact.org/pubs/dpp/dpp91/91dpp305.pdf
-  InsuranceEurope, “European insurance key facts”,.August 2016.
-  InsuranceEurope, “European motor insurance market”, november 2015, Brussels.
-  J. Leimar, “Bonus-Malus systems in automobile insurance”, springer, 1995.
-  J. Leimar, “Bonus-Malus systems”, in North American Actuarial Journal, 1998, pp. 26-38.
-  K. Loimaranta, “Some asymtomic properties of bonus systems”, in astin bulletin, vol , Part 3, 1972, pp.233-245.
-  M. Pervan, T. Pavic Kramaric, “Effects of market share and diversification on attractiveness for foreign investments|”, in Eastern European Evidence. Economic Research - Ekonomska istraživanja, Vol.25 no. 2, 2012, pp. 297-310.
-  M. Sterzynski, “The european single insurance market: overview and impact of liberalization and deregulation processes”, belgian actuarial bulletin, vol. 3, no.1, 2003, pp. 42-49.
-  M. Topolewski, M. Bernardelli, “Improving global elasticity of bonus malus dystem”, quantitative methods in economics, vol. XVIII, no.1, 2017, pp.120-133.
-  N. de Pril, “The efficiency of a bonus-malus system. Astin Bulletin,Volume 10, Issue 1, 1978, pp.59-72.
-  N. Pope, Y. Ma, “The market structure–performance relationship in the international insurance sector”, Journal of Risk and Insurance, volume 75, issue 4, 2008, pp. 947-966.
-  OECD, “Insurance and private pension’s compendium for emerging economies: Liberalization of insurance markets: issues and concerns”, 2000, Paris.
-  R. Mahmoundvand, A. Edalatti, F. Shokoohi, “ Bonus-Malus system in iran. An empirical evaluation”, Journal of Data Science 11, 2013, pp.29-41.
-  R. Norbert, “Credibility premium plans which make allowance for bonus hunger. Scand. Actuarial J, 1975, pp. 73-86.
-  S. Kozarevic, E. Kozarevic, E. Siljegovic, “Development of the insurance sector in the western balkan countries: the drive towards the European Union insurance system”, International Journal of Economic Perspectives, 2013, Volume 7, Issue 1, pp. 9-23.
-  S. Kozarević, L. Peressin, G. Valentinuz, “Efficiency of the transition of insurance markets in south-eastern european post-communist countries”, South-Eastern Europe Journal of Economics 2, 2013, pp.139-164.
-  S. O. Gönülal, “Motor third-party liability insurance in developing countries. Raising awareness and improving safety”, 2009,World Bank.
-  S. Kafkova, “A comparison of several bonus malus systems”, 4th world conference on business, economics and management, 2015.
-  S. C. Parka, J. Lemaire, C. T. Chua, “Is the design of bonus malus systems influenced by insurance maturity or national culture - evidence from Asia”, The geneva paper, 2010.
-  V. Njegomir, B. Stojić, “Determinants of nonlife insurance marketattractiveness for foreign investments: eastern european evidence”, economic research - Ekonomska istraživanja, vol. 25, no. 2, 2012, pp. 297-310.
-  V. Njegomir, D. Stojić, D. Marković, “Liberalisation, market concentration and performance in the non-life insurance industry of Ex-Yugoslavia”, ekon. misao praksa, 2011, pp. 21-40.
-  XPRIMM, “Insurance report”, issue 1, 2015.
-  XPRIMM, “Insurance report”, issue 1, 2017.
-  Y. Chen, L. Li “Analysis of relativity premium in bonus malus system based on optimal linear method”, 2014, hindawi publishing corporation.