Mandatory earthquake insurance for homes will be provided by the state itself. Through the draft law submitted for consultation by the Ministry of Finance, drafted in cooperation with the World Bank, it is announced that the "National Fund for Mandatory Earthquake Insurance" will be established.
The methodology for determining the premium, terms, and classification of housing based on risk is calculated using an actuarial methodology, based on the earthquake risk model developed for Albania, which is approved by decision of the Council of Ministers, upon proposal of the Earthquake Fund, after approval by the Financial Supervisory Authority.
Ministry of Finance
The obligation to conclude an earthquake insurance contract is also imposed on entities providing social housing for rent, housing in the process of legalization, as well as local self-government units, which finance the insurance premium from their budget. Meanwhile, the state budget finances the mandatory earthquake insurance premium for social groups in need.
"This fund is an important step towards protecting citizens from natural hazards, guaranteeing broader and more sustainable coverage. It aims to create financial security for families in the most difficult moments, providing immediate support after disasters such as earthquakes. But it is equally important that this system is transparent and efficient, and includes the expertise of the private sector to maximize benefits for citizens," Mimoza Hajdarmataj, from the Albanian Insurers Association, tells A2 CNN.
This fund is created as a public legal entity, organized in the form of a joint-stock company, where the Public Authority representing the state as the owner of the Fund's shares is the Ministry responsible for Finance. Insurance companies are left out. "We think that the creation of a state fund is an important step, but a model that leaves all responsibilities to the state alone, excluding private insurance companies, is not the best solution. The insurance industry has capacities and expertise that can provide more effective services and compete to bring better products to citizens," says Hajdarmataj.
Albania has been hit by twelve earthquakes with a magnitude above 6 since 1900, but it seems that only the earthquake of November 26, 2019 in Durrës carries a concrete assessment of the damage suffered. (A2 Televizion)
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