KLSH: The AFSA Board has not taken any penalizing measures against insurance companies

2025-04-14 07:31:00, Aktualitet CNA

KLSH: The AFSA Board has not taken any penalizing measures against insurance

The Supreme State Audit Office (SSA) assesses that the Board of the Financial Supervisory Authority has not taken measures against repeated violations by insurance companies, contributing to the increase in market risk.

According to the conclusions presented in the 2024 annual report, for the period of activity from January 1, 2021 to December 30, 2023, shortcomings have been identified in the decision-making of the AFSA Board, which has not taken penalizing measures against insurance companies, despite repeated violations and the lack of improvement in their financial situation and indicators, contributing to the increase in risk in the insurance sector.

According to the Albanian Supreme Audit Office, it is found that measures have not been taken to sanction insurance companies with fines for the violations found, creating potential damage in the range of 9.95 million lek to 19.4 million lek, thus negatively affecting the discipline and regularity of the insurance market.

Another violation, according to the SAI, is that over the years, it has been found that the interest rate on the total amount of 6,948 thousand lek has not been applied to insurance companies that have not completed the relevant part of the compensation fund. The lack of this measure has created a negative effect on the compensation fund, jeopardizing the coverage of the obligations of insurance companies towards the insured.

Furthermore, the SAI notes that in the licensing procedures to carry out insurance brokerage activities, both in the life and non-life classes, delays have been observed in meeting the administrative deadlines. These delays have created a slowdown in the entry of new entities into the market.

The full audit report at the AFSA, with the arguments for the alleged violations and the respective positions of the audited entity, has not yet been made public by the Supreme State Audit Office.

AFSA: 28 measures against entities for 2023

On the other hand, the AFSA itself does not make public the individual measures taken against supervised entities. However, a general summary information on these measures is presented in the last published annual report, that of 2023 (which partially includes the period of activity audited by the SAI.

In 2023, the AFSA took 28 measures against supervised entities. According to the institution's report to the Parliament, the measures were taken mainly as a result of findings arising from the analysis of financial indicators, from inspections carried out in the country by the Authority, but also suspensions or revocations of licenses to exercise the activity.

In the insurance market, 20 decisions were taken, of which 13 decisions for corrective measures and fines against insurance companies or the responsible person, two decisions for refusal of review of requests for review, two decisions with corrective measures against insurance brokerage companies and three decisions with revocation of licenses against entities to exercise insurance brokerage activity.

Two decisions with administrative measures have also been taken against the Albanian Insurance Bureau.

According to the financial statements of the AFSA, submitted to the Albanian Parliament, during 2023 this institution realized 9.4 million lek in revenue from fines imposed on insurance companies. According to the notes to the financial statements, the revenue realized is all fines for insurance companies, while for 2023 no revenue from fines imposed on other entities under supervision was reported. Revenue realized from fines decreased by 43% compared to the previous year.

Based on the law "On Insurance and Reinsurance Activity", the AFSA can impose fines on insurance companies that can reach up to three million lek, depending on the violation found. Administrators of insurance companies can also be subject to fines, for amounts from 100 thousand to 400 thousand lek, as well as members of the supervisory board, in the range between 300 thousand lek and 500 thousand lek.

The law stipulates that, when imposing a fine, the AFSA shall ensure that it is effective and dissuasive, as well as proportionate to the situation that gave rise to the imposition of the measure. The law also requires that the AFSA, when imposing sanctions, apply the principle of continuity, according to which similar sanctions are imposed for similar violations.

Meanwhile, three administrative decisions have been made in the securities market for 2023.

One company's license was revoked and it was deregistered from operating in the securities market, while corrective measures were taken against two banks that provide investment services.

In the private pension fund and collective investment undertaking market, two decisions have been made, which are decisions with corrective measures against private pension fund and investment fund management companies. According to the law, fines for pension and investment fund management companies can reach up to three million lek./ Monitor Magazine