CBK Deputy Governor Havolli mentioned a number of reforms undertaken by the Central Bank of the Republic of Kosovo in order to improve the situation in this sector as it continues to be underdeveloped, concentrated on compulsory insurance products (auto liability), and faced non-fulfillment of conditions, which are related to regulatory requirements for capitalization and provisioning:
"The results of the reforms undertaken by the CBK have brought a very positive and intensive response from the insurance industry. During this period, over EUR 11 million of capital has been added by insurance company shareholders to meet the capital and provisioning needs of their companies. During the last week of this month we also expect an increase of at least EUR 3 million. (...) the CBK is determined to ensure that all companies reach full compliance with regulatory requirements during this year."
Among other things, he mentioned that this industry has been a priority in the agenda of the Governor and the CBK in cooperation with international financial institutions, where it was decided that the issue of capitalization be resolved once and for all, until this process is expected to end in June. was postponed for a short period, due to the pandemic. Deputy Governor Havolli further commented:
"During the last year, but also during this year, we had continuous institutional communication with the President of the Kosovo Competition Authority, in an effort to find the most advanced modalities for addressing the TPL product in the Kosovo market. In this context, the CBK has undertaken the necessary preparations guided by the conclusion that the pricing model for compulsory products should be advanced in order to provide coverage of potential risk for each insured and, at the same time, allow variation in cost based on individual characteristics of insured risk. In other words, prices should be set based on the market and on risk.
Therefore, through this conference, we would like to inform you that as a result of close cooperation with the KCA, we have come to the conclusion that the model of compulsory policy costing should be based on the individual risk of the insured. Our goal as CBK is to move in the short term from the model which has been applied for a period of about 20 years to a model which can be considered as a liberal costing model, respecting the individual insurance risk factors. The move towards liberalization will certainly be supported by our partners from international financial institutions, but capitalization of the industry was the absolute precondition for moving in this direction. I consider that the conditions are now being met for us to take these actions."
ValonPrestreshi, Chairman of the KCA, stated:
"The KCA and the CBK have been working on this issue from last year, and in the professional recommendations we provided to the CBK we emphasized the need to liberalize this market and not to have unified TPL premium prices, thus paving the way for competitive pressure among insurance companies operating in the market. The KCA recommended to the CBK as a market regulator to begin preparations in order to move from the current market regulation to a range of permitted tariffs, to which we refer as ceiling and floor tariffs, before moving to fully liberalized market prices. We recommend moving to the second phase of premium setting at the beginning of next year."
Both sides expressed their readiness to continue cooperation.
Source: bqk-kos.org
3993 views
