Natural disasters "test" public finances/ Association of Insurers: The state bears the main burden. The reason is the lack of insurance culture
The increase in natural disasters and the increasing exposure of the Albanian economy to them is bringing to the fore the need for a new model of financial protection. The Association of Insurers of Albania emphasizes that climate change, rapid urbanization and the increase in property values have significantly increased the risk for citizens and businesses, while the level of property insurance in the country remains low.
In this context, a strategic document of the Reinsurance Advisory Board of the European Insurance Agency underlines that the gap in protection against natural disasters should be closed by strengthening the private insurance and reinsurance market, not by replacing it with centralized state schemes. According to the analysis, the private market has the capital and expertise to cope with the risk, but the main obstacle remains the lack of demand for insurance and the widespread expectation that the state will always intervene to compensate for the damages.
Experts list several reasons why the insurance culture in Albania remains low: the limited level of financial education, relatively low incomes that force families to focus on basic expenses, lack of trust in institutions and insurance companies, as well as the continuous experience of state interventions after disasters, which has created the perception that private insurance is not necessary.
The experience of the 2019 earthquake showed that, when insurance is limited, the financial burden falls primarily on the state budget and international donations, creating long-term fiscal pressures and slowing economic recovery.
For Albania, recommendations include increasing the penetration of property insurance, integrating it into mortgage loans, strengthening financial education, and improving construction standards. A stronger insurance market, experts emphasize, would significantly reduce the burden on public finances and increase the economy's resilience to future shocks.
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