One Year After the 2019 Earthquake Interview with Mr. Klaidi Çitozi, CEO of the insurance company, regarding the earthquakes of September 21 and November 26, 2019
As we mark one year since the earthquake, how do you see the trend of property insurance in the Albanian market? Do you notice increased awareness, or has the initial panic and fear faded, giving way to indifference toward this type of insurance? How is this trend reflected among businesses and individuals?
In fact, a greater increase in home insurance was expected. There was heightened interest during the first two months after the earthquake and a rise in home insurance, but currently, figures show we are at the same level as last year. Despite the significant damage caused by the earthquake—not only financial—the public’s awareness of the importance of insurance remains weak. Individuals have shown more interest than businesses, as some businesses are insured due to bank requirements, while others are influenced by corporate culture and foreign investors.
How much has SIGMA paid out so far in damages related to the earthquakes of September 21 and November 26, 2019?
The damage bill from the November 26 earthquake for our insured clients reached 4.5 million euros. The exposure was high, and the work required to assess the damage was immense, as we had never faced such a large number of simultaneous claims. Nevertheless, a well-capitalized company like Sigma managed to assess and pay out the damages in record time, ensuring the continuity of business operations and the normal lives of families who had chosen to insure their homes with our company.
How many claims are under review related to this event, and how many individuals or entities were affected?
All claims submitted so far have been reviewed. Around 660 claims have been processed, but it should be noted that 85% of them were insured due to bank requirements. Only 15% of these cases were insured due to personal awareness or because it was part of their business practice.
The pandemic has shifted attention away from the issue of mandatory property insurance against earthquakes topic that was widely discussed in the months following the November event. Do you think there is a need to revive the debate and establish a suitable scheme for insurance against events like earthquakes?
It is very true that the pandemic has somewhat diminished attention toward mandatory catastrophe insurance, but for fragile economies with limited budgets like ours, this type of insurance should be an absolute priority. A catastrophe affects not only the lives of citizens but also the state budget, and therefore, a definitive solution must be found.
No government should take on the responsibility of reconstruction in the event of a disaster. The government creates a budget for civil emergencies to save human lives and livestock, while reconstruction should be the responsibility of each individual. If this responsibility is transferred to insurance companies, then we have a multi-benefit outcome: the state budget remains untouched, citizens are compensated within reasonable timeframes, and the insurance market develops. The state should only be responsible for ensuring that constructions meet defined standards and fulfill all criteria.
How has the behavior of reinsurers in foreign markets changed in relation to the risk Albania represents after the earthquake events?
Even before the November 26 earthquake, Albania was classified as a high seismic risk zone. A rise in premiums is expected in 2021, driven by the earthquake and influenced by the pandemic. This increase did not occur in 2020 because reinsurance agreements had been signed before the earthquake happened.
Additionally, reinsurers expect us to conduct more thorough inspections of insured properties, regarding their location and the construction protocols followed. This will also lead to changes in our behavior toward clients, especially in the procedures for underwriting insurance.
Nevertheless, our company is part of a strong group like VIG and is supported by reinsurers who are leaders in the global insurance market. Their stable policies ensure that we will stand by our clients in the event of major catastrophes.
