Albania creates joint-stock company "Earthquake and Flood Fund" - Private insurance companies will act as agents for contracts
The government has sent to the Parliament for consideration the draft law "On the mandatory insurance of housing against earthquakes and floods", which envisages the creation of a new public financial mechanism to cope with damages from natural disasters.
At the center of this system is the National Mandatory Earthquake and Flood Insurance Fund, which will administer the entire housing insurance scheme at the national level.
The Fund will be a public legal entity, organized in the form of a joint-stock company, with financial and administrative functions. It will collect mandatory insurance premiums paid by homeowners and use these revenues to compensate for damages caused by earthquakes and floods.
According to the draft law, the insurance price will not be determined by the market, but will be approved by the Council of Ministers, based on the risk, geographical area and typology of the building. The methodology for calculating the premium will be based on actuarial models developed for Albanian conditions.
In this scheme, private insurance companies will not bear the financial risk, but will act as agents for the distribution of contracts, the collection of premiums and the technical administration of the process. The collected revenues will be transferred to the Fund, which will be the institution responsible for the payment of claims.
In the event of a natural disaster, the damages will be assessed by licensed experts, and the compensation payment will be made by the Fund, within the specified deadlines. The compensation will cover material damage to the apartment and the items inside it, but not loss of economic activity or lost profits.
The draft law also provides that the Fund shall create financial reserves, through the administration and investment of income, in order to cope with events with a major financial impact. The Fund shall not be subject to bankruptcy or liquidation procedures, aiming to guarantee its continuity in any situation.
The Fund's governance structure consists of the General Assembly, the Supervisory Board and the Administrator. The Supervisory Board has a key role in approving the Fund's investment policies, regulations and strategic direction.
With this new scheme, the state aims to shift risk management from emergency interventions after disasters, towards a predictable insurance system, reducing the direct exposure of the state budget and creating a sustainable financial mechanism for housing protection.
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