2012 Annual2012annual2011 Reportreport © 2013 Albanian Financial Supervisory Authority
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2012 annual2012annual2011 reportreport © 2013 Albanian Financial Supervisory Authority Any use of data included in this publication should be subject of the reference to AFSA. Please contact us for any further information. Address : Str. “Dora D’Istria”, No. 10, P.O.Box. 8363, Tirana Phone : +355-4-2251355 / 6 Fax : +355-4-2250686 E-mail : [email protected] Web : www.amf.gov.al Contents Chairperson’s Statement 6 PART I AFSA PRESENTATION AND ACTIVITY 7 Chapter 1 AFSA Organization 7 1.1 Mission, Objectives & Fundamental Functions 7 1.2 Management & Organization 8 1.3 Budget 16 1.4 Changes to AFSA Regulatory Framework 17 Chapter 2 AFSA Activity 19 2.1 Regulatory Activity 19 2.2 Licensing Activity 21 2.3 Supervisory Activity 30 2.4 Information Technology 45 2.5 Institutional Cooperation 48 2.6 European Integration 56 2.7 Public Relations and Transparency 61 Chapter 3 Consumer Protection 64 PART II SUPERVISED MARKETS 67 II. 1 Insurance Market 67 II. 2 Securities Market 78 II. 3 Voluntary Private Pension Market 82 AFSA Challenges and Priorities 84 APPENDICES 88 A: AFSA organizational chart B: Supervised Financial Sector Legal/Regulatory Framework C: List of Supervised Institutions D: Membership and signed Cooperation Agreements E: Macroeconomic Indicators AL BANIAN FINANC IAL SU PERVISORY AUTHOR ITY 5 Chairperson’s Statement Dear Reader of 2012 Annual Report, For several years the international community has made efforts for overcoming the crisis and establishing an ambitious regulatory and supervisory framework that is a real challenge for financial regulators, including the Albanian Financial Supervisory Authority (AFSA). This ever-changing international framework is also reflected in AFSA activity, despite the relatively low integration of the Albanian financial market into the global one and the rather marginal impact of the global financial crisis on the financial markets in Albania. First and foremost, AFSA consolidated its belief that strengthening the independence of the regulator was a significant factor in coping with the challenge of developing the supervision framework. On 31 October 2012 Enkeleda Shehi, Chairperson Financial Supervisory Authority AFSA organized its first international conference, which focused on the independence of financial regulators from the perspective of EU integration, and the lessons learnt from the latest global financial crisis. The event was transformed into a forum of discussing views by experts and chairpersons from regulators that represented markets from USA to Europe. The messages conveyed and conclusions drawn at the conference helped AFSA reformulate the Law on AFSA in a more complete and clearer way. The amendments, which were resubmitted to the Government, contribute to restoring independence to the Authority and setting up independence safeguards. Second, the extension of supervised financial markets and their increased complexity generates constant challenges for AFSA. Therefore, a considerable part of AFSA human and financial resources are committed to strategies and projects that are related to enhancing the quality and effectiveness of the supervisory and regulatory processes. Third, the management of the compulsory insurance tariff liberalization process received significant attention in 2012. That process required AFSA response in the form of developing and adopting the necessary regulatory framework, and supervisory vigilance in order to assess risk premiums as realistically as possible. AFSA intends to protect consumers by encouraging what we call “healthy competition”, working along two lines of action: consumers will be provided with competitively priced products, and insurance companies will have adequate levels of provisions and guarantees that they will be able to settle their obligations deriving from damages suffered by consumers. Fourth, I would like to note the increased number of licensees in the supervised financial markets, which shows investors’ increased attention to the Albanian financial markets. The most important challenge for AFSA is the need to extend its risk-based supervision methodology to the securities market and the private voluntary pension fund market. The strategy that AFSA has designed is of a complex nature. I am proud of the serious and insistent AFSA staff’s efforts for implementing it, and of the support that international institutions and the Board have given for the process. I hope that readers will find this Report a useful source of information and education. Sincerely, Enkeleda Shehi PART I AFSA PRESENTATION AND ACTIVITY Chapter 1 • Protecting the consumers AFSA Organization • Promoting the markets • Enforcing the law 1.1 Mission, Objectives & Fundamental Functions The Financial Supervisory Authority (AFSA) was established pursuant to Law No. 9572 of 3 July 2006 “On the Financial Supervisory Authority”, as an independent public legal institution reporting to the Parliament of Albania. The Financial Supervisory Authority is a consolidated regulatory body that supervises the financial markets of insurance, securities and private voluntary pensions in Albania, which are hereinafter referred to as the “supervised financial markets”. Our Mission AFSA mission is to contribute to promoting stability and secure development in the supervised financial markets. Objectives In the context of performing its legally sanctioned functions and responsibilities, AFSA is guided by the following objectives: • Protect consumers’ interests; • Promote supervised financial market transparency and reliability; • Ensure legal compliance. AFSA Main Functions AFSA main functions are the regulation and supervision of: • insurance market and its activity, including all insurance, reinsurance and brokerage activities and related operations; • securities market and its activities, including the securities-investment-related activities of persons operating in this market; • voluntary pension market and its activities, including all voluntary pension insurance activities provided by entities that have been licensed to operate in this market; • other non-banking financial activities in accordance with the provisions of the relevant special laws. AL BANIAN FINANC IAL SU PERVISORY AUTHOR ITY 7 1.2 Management & Organization AFSA Board AFSA Board is its governing and decision-making body. All Board members are appointed by the Parliament of Albania for a five-year term. AFSA Board underwent a few changes in 2012. The current AFSA Board composition1 is shown below: • Enkeleda SHEHI Chairperson * • Riçard MARKU Member • Mati PEPA Deputy Chairperson ** • Kestrin KATRO Member • Enkela IDRIZI Deputy Chairperson • Astrit HADO Member • Miranda RAMAJ Member In the context of performing its functions, AFSA Board conducted 12 meetings and took 172 decisions in 2012. The following table shows the number of AFSA Board decisions grouped by type of decision. The Board decisions aimed at more effective supervision of the insurance, securities Albanian Financial Supervisory Authority Board and private voluntary pension markets. The most significant decisions included ones that were related to the invigoration of the market through licencing of entities. In this context AFSA licensed a new Non-Life insurance company, in addition to insurance professionals, investment funds and securities brokers. Note 1 * Decision no. 10/2012 of 16 February 2012 of the Parliament of the Republic of Albania discharged from her duties the Deputy Chairperson of the Board, Mrs. Enkeleda Shehi, and appointed her as the Chairperson of the Authority Board. ** Decision no. 11/2012 of 16 February 2012 of the Parliament of the Republic of Albania appointed Mr. Mati Pepa as a Member and Deputy Chairperson of the Board, holding the position of the Head of the Supervision and Disciplinary Department. 8 ANNUA L REPORT ‘12 Table 1: Classification of AFSA Board decisions, by type of decision Type of decision Number Decisions on companies operating in supervised markets2 137 Decisions adopting and amending implementation legislation 18 Decisions imposing administrative measures on supervised entities 8 Decisions on AFSA regulatory framework 9 Total number of decisions 172 In addition AFSA Board approved statutory amendments of insurance companies and pension fund management companies, amendments to prospectuses, amendments to template contracts of private voluntary pension funds and insurance contracts, private offering of bonds on the securities market, etc. Other important decisions were related to the supervisory functions, including remedying measures and sanctions, the aim of which was to prevent any Enkeleda Shehi Chairperson adverse situations, and eliminate violations. AFSA Board key powers 1. Develop the rules on job descriptions and goals for each department and unit; 2. Draft and approve basic principles of the Institution’s activity; Mati Pepa 3. Draft and approve rules and instructions provided for in the Law; Deputy Chairperson 4. Disseminate written guidelines on the interpretation and implementation of laws and regulations; 5. Issue, reject, suspend or revoke licences to operate in the non-banking financial market; 6. Restrict or prohibit insurance and reinsurance company investments if they do not comply with regulatory ratios or endanger the company financial position; Enkela Idrizi Deputy Chairperson Shënim 2 Key decisions in this group pertain to amendments to articles of association of companies, licencing, changes to insurance contracts and private voluntary pension funds, changes to prospectuses, decisions on the activity