Starting January 1, 2025, a new insurance policy framework will take effect in Albania, directly linking car insurance premiums to drivers’ accident records. This innovative approach, implemented by the Financial Supervisory Authority (AMF), introduces a universal “bonus-malus” system that all insurance companies offering mandatory third-party liability (TPL) policies must adopt. The system applies to private cars (category B1) and small commercial vehicles such as vans and minibuses (category B2).
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| Car accident happened on Tirana Durrës road, kilometer 11, May 2023 |
What is the Bonus-Malus System?
The “bonus-malus” system is a dynamic pricing mechanism for mandatory TPL insurance. Under this system, insurance premiums will be adjusted based on a driver’s accident history and driving experience. Drivers responsible for one or more reported accidents during the insurance period will face increased premiums, while those who maintain a clean driving record will benefit from reduced insurance costs.
Key Risk Factors in the Scheme
In addition to accident history, AMF has outlined several other risk factors to calculate insurance premiums:
► Region of Vehicle Registration: Counties like Berat, Dibër, and Kukës are classified as low-risk, whereas other counties have a standard coefficient of “1.”
► Driver’s Age and Driving Experience: Younger and less experienced drivers may face higher premiums.
► Vehicle Specifications: Factors such as engine power and the age of the vehicle also influence risk assessment.
► Type of Use: Whether the vehicle is used by an individual or a business entity.
Insurance companies may further expand these risk criteria based on their assessments, tailoring premiums to reflect individual driver profiles more accurately.
Expected Benefits
According to AMF, implementing the “bonus-malus” system is expected to yield significant benefits:
Fewer Traffic Accidents: By economically incentivizing careful driving, the system aims to reduce road accidents.
Fairer Insurance Pricing: The new policy ensures that TPL premiums are calculated more equitably, based on the driver’s performance and risk profile.
Enhanced Road Safety: Encouraging better driving habits will contribute to the protection of lives and property.
Transparency and Social Impact
The “bonus-malus” system relies on transparent processes, including mathematical formulas that make it a fair and merit-based mechanism. On a societal level, it is anticipated to raise public awareness about safe driving practices and improve the overall quality of insurance services. Consumers are expected to benefit from more personalized and reliable insurance offerings.
A Proven Model
Data from the AMF indicates that similar systems have successfully reduced accidents and fostered safer driving in other contexts. This success reinforces the expectation that the “bonus-malus” system will lead to measurable improvements in Albania.
As this new insurance policy framework rolls out, drivers in Albania have an opportunity to reap the rewards of careful driving, while those who pose a higher risk will bear the financial consequences. This marks a significant step forward in aligning road safety with economic accountability.