"Every Albanian will insure their home against earthquakes"/ How will the premium be calculated? About 2% of the damages will be paid by the owner himself
Every family will insure their home against earthquakes. The Ministry of Finance has issued a draft law for public consultation that makes it mandatory to insure homes against earthquakes.
This draft law was drafted with the support of the World Bank and aims to improve the risk management system in Albania, ensuring better financial protection for citizens and reducing the fiscal burden on the state budget after catastrophic events.
Insurance companies will only have the role of sales agent. A citizen must pay an insurance premium to an insurance company for one year, a premium which the company will pass on to the state, specifically the Earthquake Fund. Insurance companies will only receive a commission from the state for providing this service. The premium can be paid for one year or more, with the right to renew the contract.
But how much will we pay and how will the compensation be awarded?
This is expected to be determined in the future by a decision of the Council of Ministers. However, in any case, through the Earthquake Fund, the state will cover 98% of the damages (within the limit of the insurance amount to be determined) and 2% will be covered by the citizen himself. Also, the premium will be calculated according to a methodology that includes the type of building and whether the house is built in a highly seismic area or not. The compensation will be provided within 3 months.
For the most vulnerable social groups, the state will finance the mandatory earthquake insurance premium. This insurance will only cover property damage and not life-related damage.
For those who do not insure their homes against the earthquake, they will no longer be offered cadastral services, and they will not receive services from e-Albania and the National Business Center.
Albania is ranked third in Europe by EFEHR (The European Facilities for Earthquake Hazard and Risk), for earthquake risk. The most recent and most devastating earthquake was the November 2019 earthquake with a magnitude of 6.4, which affected over 200,000 people in 11 municipalities. This earthquake caused a significant economic impact, with direct costs representing about 7.5% of the country's Gross Domestic Product. This is the argument of the Ministry of Finance for making home earthquake insurance mandatory.
Such an initiative has been discussed for years, and was put up for public consultation even earlier, in 2023.
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