Prime Minister Edi Rama has announced that citizens will soon be forced by law to have home and business insurance. Referring to the floods and damage caused by the rainfall during the past days, the prime minister declared during the meeting of the Emergency Council:
We are the only country that doesn’t have this legal obligation in a time that the state budget is not able to pay compensation.
Even though it may seem that the initiative for mandatory insurance was spurred on by the recent weather situation, the obligatory home and business insurance is not a new idea.
In September 2017, the Financial Monitoring Authority (AMF) directed by former PS deputy Ervin Koçi announced that the government had prepared a draft law to make home insurance against natural disasters mandatory, and that it was being discussed with the World Bank.
If this law is approved, every property owner will pay at least €50 euro per year in insurance, apart from the local taxes. However, as the market for mandatory car insurance has shown, prices are bound to rise after the law has passed, as the market is under control of an oligopoly.
Both scholars and economists opposed the government’s plan. In October, economist Zef Preçi said during an interview with TV Klan that the government’s initiative was a new tax imposed on citizens as a favor to several companies.
Instead of the government relocating the people during the last 5–10 years, it aims to impose a new tax that will further impoverish the citizens. They are simply aiming to increase the income of some companies, if you take into account how often earthquakes happen.
Arguing against Prime Minister Rama’s claim that Albania would be “the only country in the world” without mandatory insurance, Preçi stated that “even in the most problematic areas, insurance was voluntary.”
Asked whether a mandatory insurance would solve the compensation issue for the families who have been flooded, Preçi explained that insurance companies still have a total outstanding debt of €10 million of payments to citizens for car damages, accumulated since 2002.