Albania: Bringing insurance supervision closer to European standards by moving to risk based approach
The project involved setting up an effective supervision methodology to transition to a risk-based supervisory approach, and a legal review to upgrade the legal framework. The overall project took place in the context of the World Bank’s capacity building strategy for the Albanian Financial Services Authority (FSA); the project’s timing reflected this systemized approach.
Accordingly, the project design was mapped over a longer-term, institution-wide change management effort by the relevant agency (as opposed to an isolated task to complete by a single department). The project design also helped to further refine the contours of follow-up work streams as necessary to fill the gaps and maintain momentum. It was a relatively large project from FIRST’s perspective, with the development of the comprehensive legal framework for insurance as the key starting point for the strengthened insurance framework.
The legal review paved the way for the restructuring of the Albanian insurance market legal framework and its supervision. There was a high level of absorption of the legal recommendations insofar as the authorities designed the subsequent reform around the direct outputs.
The legal recommendations were used by the FSA to upgrade the insurance legal framework in line with the European Union approach and to engage the insurance industry on discussions for longer-term amendments to the legal framework and supervisory approach to move to a risk-based supervision model.
The Task Team Leader reported that, according to reactions from international circles, the market appears to be supervised in a real professional manner after implementation of the project. The authorities report that basing the legal TA on the EU directives was forward-looking and helping to lead Albania’s EU accession integration.