Mr. Janusz Popiel, Chairman of the Alter Ego Association, has published an entry on Facebook interpreting the data from the PIU report on motor vehicle insurance. We would like to refer to this entry, because interpretations of the Polish insurance statistics may raise some doubts. The Chairman pointed out in his entry that the statements concerning the growth of paid out compensations “may raise justified doubts”. Therefore, we would like to directly refer to the quotations from Mr. Chairman’s statements illustrating his thesis.
Quotation 1.
“The total number of damages that occurred in class 10 in 2015 was 861 thousand and decreased in comparison to the level from 2014 by 3.5%. However, non-personal damages decreased only by 1.2%, and personal damages by as much as 26.1% within the same period.”
Of course, the number of damages fell down, because for years we have had less accidents and collisions, both with fatalities and non fatalities. When explaining the increase in prices of motor civil liability insurance (OC), PIU always emphasizes that the value of paid out compensations and benefits is constantly increasing despite a fall in the number of accidents and collisions.
Quotation 2:
“In the last three years, the value of an average payment of compensations and benefits in class 10 was systematically decreasing and in 2015 amounted to PLN 4.78 thousand. This is less than the 5 year average, which amounted to PLN 4.9 thousand.”
Yes, because underlying the increase in compensations and benefits is not only the average payment, but also the increase in the number of payments, i.e. individual awards of payments to the injured. It can be found in the report on page 23:
If we have a considerable growth of payments from one claim (e.g. many persons injured in an accident or persons receiving compensations due to one accident), then the average payment may decrease even with a considerable increase in the total amount of paid out compensations and benefits.
Quotation 3:
“Using five-year perspective, the annual average decrease in the gross value of paid out compensations and benefits amounted to 1.7%, but in relation to the record held in 2012, the year 2015 shows that the level of this value has been lowered by as much as 11.1%. The real value of average compensation, with allowances made for inflation, has been annually decreasing by 2.3% on average, i.e. by 8.7% in relation to 2011”
The title of the section, to which Mr. Chairman refers, concerns compensations and benefits in relation to the number of payments in class 10. It is clearly indicated in the report. So, again – the average payment value may fall down when the number of payment grows. In turn, the total burden is increasing, as you can see on page 26 of the report:
Summing up:
- a claim is not the same as a payment. There may be a few payments per one claim. The number of claims may decrease (which is happening), but still the number of payments and, as a consequence, the total number of compensations paid out may increase (which is also happening).
- the amount of one paid out compensation and benefit may increase irrespective of the average single payment. It is enough to imagine one payment at the amount of PLN 10 versus two payments under the same claim at the amount of PLN 10 each. The average is higher in the first case, but the payment is higher in the second case.
We very well understand the wish to deepen the knowledge of the motor vehicle civil liability insurance (OC), especially since there has been much debate around this topic recently. PIU emphasized many times that the main reason behind the currently observed growth of the insurance policy price is the extended coverage of the injured and the increasing value of benefits paid out. We kindly request those persons who have any doubts regarding interpretation of the contents of the PIU publications to contact the PIU office. We are always available to help. All persons interested in the publication are kindly encouraged to read it.
Photos under the link: https://piu.org.pl/wyjasnienia-interpretacyjne-do-raportu-komunikacyjnego-piu/
