The Kosovo Competition Authority considers that the Central Banks request to increase the price of TPLs to 36.56% unilaterally for all Insurance Companies violates the Law on Protection of Competition.
Below you will find the Authority's reasoning and guidance on how CBK should deal with it.
The fundamental principle of competition law and policy is to provide free market access to any undertakings that meets the requirements to compete in that market in the interests of users of products / services and can compete on price and quality.
The Central Bank of Kosovo, as the insurance industry's regulatory authority, ensures that insurance companies compete with the prices and quality of services they provide.
CBK should avoid the interaction of insurance companies with each other in the process of calculating premiums, without adopting and orienting a similar price, but this process should rely on data independently provided by insurance companies.
The unification of TPL premium prices is contrary to the principles of competition in a free market. The Central Bank of Kosovo should adopt individualized charts based on the risk analysis according to the structure / portfolio of the Insurance Companies, product characteristics and insurance structure of each insurance provider. As insurance companies in the Republic of Kosovo currently maintain the same prices, the Authority suggests that they be based on market conditions, supply - demand, and consequently price determination under these conditions.
The main differences in determining the TPL premium price between insurance companies should result in their ability to predict future losses and their ability to charge the appropriate premium for each underwriting class, which should also be well-defined and accurate. Depending on the sales strategy, company capacity, and a wide range of parameters that can be considered such as driver age, vehicle age, vehicle type, technical characteristics, damage history and many other reasons, pricing should always be done independently.
The Authority suggests the CBK to consider creating new tariff groups for assets that may be at higher risk, avoiding the burden on other tariff groups that do not have this level of risk