Competition: Borrowers to choose life insurance companies for loans without restrictions

2026-05-05 07:13:00, Ekonomi CNA

Competition: Borrowers to choose life insurance companies for loans without

The Competition Authority has closed its in-depth investigation into commercial banks in the life insurance loan intermediation market.

At the conclusion of the investigation, the Competition Authority has not proven any violation of the law on the protection of competition and has not imposed any penalties on any of the investigated entities.

However, the Competition Authority has decided as a binding measure against banks to expressly allow each borrower to have the right to select the company where they will carry out the required life insurance for the bank loan.

Banks have been ordered to amend the relevant provision of the standard loan contract and to recognize the borrower's right to insure life in any of the insurance companies licensed by the Financial Supervisory Authority. In the current practice, customers are generally given the opportunity to choose the insurance company among those accepted by the bank.

The decisions also stipulate as a mandatory measure that each bank shall draft and implement, for each borrower, a single form, in which the offers of all insurance companies are reflected, according to the premium proposal from each insurance company. The form in question must have on the first page, in visible writing, without serial number, the name of each life insurance company and, following the name, the value of the premium according to the relevant coefficients and the selection of the borrower. This form must be signed by both parties, the bank and the borrower, and be kept as an integral part of the loan file accessible at any time by the Competition Authority.

The decisions also establish the obligation, within the framework of the pre-contractual information submitted to each borrower, to include a clear, written and complete notice on the processing of personal data for the purposes of assessing and verifying the bank's conduct on the market, including access and processing of data by the Competition Authority, in the event of monitoring, preliminary investigation or in-depth investigation of the bank.

This mandatory measure was imposed following the position of the Commissioner for Personal Data Protection, which prohibited banks from sharing personal data of customers with the Competition Authority, for the purpose of the investigation in question.

In case of non-implementation of the above mandatory measures, commercial banks risk a fine of up to 5% of the average daily turnover for the previous financial year, according to the provisions of Article 76 of the Law "On the Protection of Competition"

Despite the fact that the Authority did not find sufficient evidence to prove legal violations, practices were identified in some of the banks that, according to this institution, create strong suspicions of limiting competition and the right of choice of borrowers in life insurance.

According to the Competition Authority, the circumstances identified in relation to contractual provisions, the practice of communicating offers only verbally, the level of transparency towards the customer and the limitation of the consumer's effective choice, create indications that some banks may have used their position to condition consumers and to limit effective competition in the life insurance market, through related practices, lack of transparency and the imposition of unfair contractual conditions.

In fact, the investigation revealed that specific banks had entered into exclusive agreements with a life insurance company for specific loan products.

Also, according to the Competition Authority, the high level of brokerage commissions applied in this market, in some cases raises doubts about the exploitation of a dominant position to the detriment of the consumer./Monitor.al