Albania's Insurance and Reinsurance Law (52/2014) entered into force in July 2014.

Scope of law
The law aims to strengthen and develop the insurance sector, while focusing on the effective protection of consumer interests, and to ensure that the insurance market functions in a safe, stable and transparent manner. To this end, it sets out principles and determines the procedures for the establishment, organisation, administration, functioning and supervision of insurance and reinsurance. It also protects the rights and interests of consumer insureds.
Harmonisation
The new law also aims to align Albania's insurance legal framework with EU directives related to insurance and reinsurance.
The law includes new provisions for EU and European Economic Area insurers conducting insurance activity in Albania directly or through the establishment of a branch. However, all provisions relating to such insurers shall enter into force only after Albania has become an EU member state.
Corporate governance
The new law provides that insurers with single-level administration (ie, where the administrative council is the only governing body) must have no less than five members and meet the requirements for sound corporate governance according to the principles of the Organisation for Economic Cooperation and Development. In addition, the law sets out the criteria that key decision makers (ie, board members, managers and the main auditor) must meet in order to perform their duties. The Financial Supervisory Authority will assess whether these decision makers meet the listed criteria and can therefore hold the relevant positions in the insurer.
Consumer protection
The law dedicates a chapter to consumer protection by guaranteeing effective protection of consumer insureds. Unlike its predecessor, the new law includes a special chapter in which thorough and comprehensive provisions are laid down in connection with insurers' obligations to provide complete and clear information before entering into an insurance contract and during the contract's validity. The law also governs advertising and the obligations of an insurer in promoting its products.
Audit and risk management
Another novelty of the new law is the provisions governing the establishment and organisation of the audit committee and risk management system. The law requires that insurers establish an internal audit system for monitoring and implementing internal policies and procedures, in order to assess the efficiency of their activities and monitor compliance with the legal framework. The internal control system aims to identify and evaluate the risks to which the insurer may be exposed.
Supervision
The main novelty that the law introduces is the risk-oriented supervision by the authority. For this purpose, the authority will draft and adopt the Supervisory Manual with Risk Focus. The basic concept behind this new method of supervision is to identify higher-risk areas of activity and implement measures to reduce such risk to acceptable levels. This new approach aims to prevent financial problems before they happen. Depending on the risk profile, the authority sets supervision priorities and intervention levels in order to ensure that risks are acceptable. Supervision should be carried out through financial analysis and inspection at the place of activity. Regarding the latter, new provisions regulate the inspection process.
Compliance
Insurers have two years to take all necessary measures to comply with the law. With regard to agency and brokerage companies, as well as agents and brokers, the compliance timeframe is six months.

For further information please contact Ilir Limaj at Boga & Associates by telephone (+355 4225 1050), fax (+355 4225 1055) or email (ilimaj@bogalaw.com). The Boga & Associates website can be accessed at www.bogalaw.com.

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