Hoti: With insurance tariffs up, the CEC favours inefficient companies

LDK elected MP Avdullah Hoti, rejecting BEC's decision to raise security fees of 26 %s, has declared that Kosovo Central Bank with this decision is trying to protect the interests of inefficient companies

According to the former finance minister, the CEC's reasoning that it has been necessary to raise the uniform tariffs does not stand for the fact that your entire company has the same cost and is equally efficient. According to Hoti, the CEC with its decision only fails to develop free competition in the market, Periscope follows.

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With the uniform increase in mandatory insurance fees of 26% for all insurance companies, the Central Bank has further limited free competition in the insurance market.

1. It's hard to reason that the uniform increase in insurance fees without a sea analysis, by acting professionals, for each company in particular. No one can convince that all companies have the same costs and are equally efficient. No one can convince that this increase in tariffs has been necessary with the reasoning that they have not increased since 2011. The entry of new companies into the market during this period is clearly indicator that existing tariffs have been profitable. Therefore, this Central Bank action can be seen as a protection of the financial interests of inefficient companies, providing the market to companies, at the expense of citizens who do not do harm, and of insurance companies that reduce spending increases the quality of services.

2. Today, the insurance market represents less than 5% of the financial market in Kosovo, which is very small turnout after two decades of operation. As such, this market is not helping the development of the economy in Kosovo. Provided prices of supply, exports, contracts between businesses and other insurance instruments are just some of the services that insurance companies have to offer to help develop the economy and, of course, increase their profits.

3. The Central Bank should commit to boosting the insurance market by promoting free competition, encouraging companies to increase the range of insurance services, as well as constantly monitoring their liquidity. Clearly, central bank governors have consistently failed to secure a competitive market that would enable the growth and diversification of insurance services for businesses and citizens. A Central Bank strategy for the development of this market is highly needed, co-ordinated with companies operating in this market. I am sure there will be widespread debate in the Kosovo Assembly when the Central Bank's annual report, which will hardly receive support from MPs, is discussed.