Polish insurers paid more than PLN 28bn worth of claims and benefits in the first three quarters of 2013 to clients and the injured.
Interesting figures after Q3 2013:
• The total premium in the insurance market amounted to PLN 43.3bn (a decrease year-to-year by 7.7%)
• The total claims and benefits paid amounted to PLN 28bn (a decrease year-to-year by 3.91%)
• The average claim paid under motor third party liability insurance increased year-to-year from PLN 5,369 to PLN 5,389
• Benefits under unit-linked insurance increased year-to-year by 15.6% (to PLN 5.4bn)
Motor insurance market
Key figures:
• Third party liability insurance – 725 thousand claims and benefits paid for the overall amount of PLN 3.9bn.
• Comprehensive insurance – 538 thousand claims paid for the overall amount of nearly PLN 2.6bn
• The gross written premium in third party liability insurance amounted to PLN 6.2bn (a drop by 5.57%)
• The gross written premium in comprehensive insurance amounted to PLN 3.9bn (a drop by 6.53%)
PIU Comment:
A tendency can be seen on the third party liability insurance market to an increasing average payment. The number of damage reported remained at a practically unchanged level. An insignificant decrease in the number of policies (by 1%) can be seen in comprehensive insurance and a similar decrease in the number of damage reported. The technical result on comprehensive insurance was PLN 367m after three quarters of 2013 and it was approx. 27% lower than a year ago.
The technical result on third party liability insurance was PLN 106m, compared to the loss of PLN 77m a year ago. However it needs to be emphasised that the presentation of the overall technical result on third party liability insurance does not adequately illustrate the market situation. It needs to be added that only four insurance companies report currently profits on motor third party liability insurance, and three of them earn profits which do not exceed several million PLN. Nineteen insurance companies report loss on motor third party liability insurance.
Non-life insurance market (exclusive of motor insurance)
Key figures:
• The premium for non-life insurance (exclusive of motor insurance) amounted to over PLN 9.9bn and was 10.8% higher than a year ago.
• The premium for insurance against the so-called various financial risks substantially increased. It is the consequence of several factors, including the adjustment of tariffs to the level of risk in insurance guarantees, continued intensive investments in infrastructure and transport, financed by the public sector.
PIU Comment:
Insurance against damage caused by natural forces and the so-called other damage to property is profitable and proves the absence of significant catastrophic events. ‘This year’s damages caused by natural forces did not have a significant effect on the financial standing of insurers. Unfortunately, despite the raising frequency of damages caused by natural forces, the number of the insured remains practically unchanged,’ emphasises Jan Grzegorz Prądzyński, the President of PIU Management Board. The number of policies against the consequences of natural forces increased year-to-year only by 1.7%.
Life insurance market
Key figures:
• Claims and benefits from all life insurances amounted to PLN 17.84bn (a decrease by 4.57%)
• The premium for life insurances decreased by 14.54%, to PLN 23.23bn.
• In Q3 2013 alone, for the first time in 6 years, the premium for class three insurance was greater than the premium earned in class one
• Despite substantial changes in the premium earned in class one (decrease) and class three (increase), the share of those insurances is still the dominant one in the total premium written (84% after Q3 2013 compared with 86% after Q3 2012)
PIU Comment:
The decrease in the market premium is still caused mostly by short-term life insurance policies, i.e. products combining the features of a life insurance policy and a bank deposit. For this class of products, the decrease in premiums was the highest (more than 31%). In terms of benefits paid, the biggest increase is connected with unit-linked insurance. The value of benefits increased by 15.6%.
Net financial result
The net profit of life insurers after Q3 2013 was more than PLN 2.3bn and was 10% lower than a year ago. ‘It is the effect of results on investing activity which deteriorated from the last year,’ explains Jan Grzegorz Prądzyński.
According to the financial statements data, non-life insurance companies closed three quarters with PLN 5.83bn worth of profit. We should clearly state that this result is mainly related to the dividend policy of the largest Polish insurance group.
Both life insurers and non-life insurers reduced the costs of their business activity. After three quarters of 2013, Polish insurers paid PLN 957m of income tax.
The excel table presenting results
The Polish Insurance Association, in cooperation with the Insurance Guarantee Fund (UFG) are launching the project of the implementation of the Base of Events and Damages (BSZ). The Base will include data on property insurance (excluding motor insurance, the base of which already exists in UFG) and life insurance.
The General Meeting of PIU voted for the development of the base on 16 January 2014. The main purpose of BZS is to identify cases of multiple claims concerning potentially the same insurance event. It concerns the situations when money are wrongfully obtained by reporting the same damage a few times in different insurance companies.
The base will include both property insurance and life insurance, and its various functions will be started gradually. Firstly, the base will include data related to:
• Two groups of property insurance:
insurance against fire and other natural disasters (e.g. of a flat, building)
insurance against other material damage (e.g. thefts)
• Two groups of life insurance:
o Individual protective insurance (against all risks) including endowment insurance
o Group insurance within the scope of: death, serious illness, permanent bodily harm, hospitalization (without surgery)
BZS will be operating on the basis of voluntary actions and reciprocity (if you add = you receive) Only insurance companies and branches of insurance companies that will join the project will be able to make inquiries regarding data in the base.
PIU will perform the function of data administrator (pursuant to the Regulation of the Minister of Finance of 16 August 2007). Insurance companies have chosen UFG to perform processing functions (of the so-called data processor). – The market have suggested that we are a trustworthy institution with great practical experience in the development and supervision of database operation. Therefore, it is worth remembering that using the existing infrastructure of UFG will be much cheaper than developing a new one – says Elżbieta Wanat-Połeć, President of the Management Board of UFG. – Our experience tells us that development of the base is a really hard work requiring great commitment of all participants – she adds.
The cost of development and start-up of the base amounts to about PLN 6.8 million. Nevertheless, an increase in the detection rate of swindles thanks to the BZS base is estimated at PLN 5.7 million in the case of life insurance and at about PLN 11.1 million in the case of property insurance (excluding motor insurance) in the first three years of the base operation. – Of course, these are only estimates. I have no doubts that insurance companies will be actively using this new tool, which will help to decrease the amount of money obtained wrongfully and eliminate any illegal actions – says Jan Grzegorz Prądzyński, President of the Management Board of PIU. The first trial BSZ run is to take place in the first half of this year.
Several days ago PIU received a copy of the letter from Andrzej Jakubiak, Chairman of the Polish Financial Supervision Authority (KNF) addressed to Wojciech Wiewiórkowski, PhD, Inspector General for the Protection of Personal Data (GIODO). In this letter the Chairman of KNF is expressing his support for the development of BZS, pointing to the fact that this project is coincident with the statutory activity of the supervision authority.
For the whole period of base development, PIU was in constant touch with GIODO. The base development plan was submitted to the Inspector General with a written assurance that the BZS project meets all legal requirements, in particular:
1. UFG performs the function of outsourcer in this project and provides only services (actual activities) related to providing data to the base and base hosting, data processing and providing data to insurance companies. UFG does not have the right to use the data entrusted for its own purposes.
2. A current database of UFG concerning motor insurance will not be combined or compared with BSZ at any stage of the process.
3. Activities performed by UFG are only auxiliary or related to technical issues. They do not constitute statutory activities of PIU.
4. Data included in BZS is confidential insurance information under the Insurance Activity Law and cannot be made available entities other than insurance companies, PIU and UFG, being service providers in this process.
EY presentation on the project
On 16 January, during the General Meeting of PIU, the industry awards “In recognition of service for insurance industry” were given. Please have a look at the gallery of photographs of this event.
On 10 December 2013, representatives of the Polish Insurance Association met with Gabriel Bernardino, Chairman of the European Insurance and Occupational Pensions Authority (EIOPA) and its representatives. The meeting was aimed at presenting the Recommendation of good information practices regarding life insurance policies with insurance capital funds.
Representatives of PIU were assured that the recommendation prepared by the Association may serve as a model for EIOPA as regards its work on information standards in connection with the final form of the PRIPs regulations.
During the presentation, Gabriel Bernardino expressed his appreciation with respect to the Polish self-regulatory solution. He approved the involvement of insurance market in the preparatory stage. He emphasised the well-thought-out implementation process of the solution, in particular consultations with the Polish Financial Supervision Authority (KNF), the Office of Competition and Consumer Protection (UOKiK), the Ministry of Finance, the Polish Insurance Ombudsman, and examining materials in terms of risk connected with counteracting unfair competition, among other issues.
According to Gabriel Bernardino, obtaining wide support from the Polish Financial Supervision Authority, which was expressed by the promise to publish the text of the recommendation and a list of insurers which will accede to it on the KNF’s website, and including compliance with the recommendation rules in the BION (Supervisory Review and Assessment) was exceptionally important and useful.
In the sample ICF Product Data Sheet, the Chairman found very useful the inclusion of three variants of insurance history simulation, standardisation of rates of return and a clear form of presentation of fees and types of risk connected with the product. According to him, it will ensure better comparability of offers proposed by insurance companies.
At the meeting, the idea of self-regulation in the form of soft law and active market operations identifying and solving significant client issues received a positive opinion. Gabriel Bernardino pointed out that markets which disregarded consumer issues and did not react to them were regulated authoritatively, in most cases with negative effect from their perspective. Therefore, he keenly approved wide support (98 per cent of the market measured by the premium on insurance policies with ICF after the third quarter of 2013) which the recommendation adopted by the Association enjoys. At the same time, he expressed his hope that insurance companies which did not declare to accede to the recommendation, will change their minds soon.
At the request of the EIOPA’s Chairman, representatives of PIU agreed to keep him informed about the progress of works on implementing the icf recommendation in Poland.
The meeting was attended by:
From PIU:
• Jan Grzegorz Prądzyński, CEO of PIU
• Marcin Łuczyński, Member of the Management Board of PIU
• Piotr Zadrożny, Coordinator of the Tax and Finance of Insurance Companies and Life Insurance Team
From EIOPA:
• Gabriel Bernardino, Chairman of the EIOPA
• Dr Manuela Zweimueller, Head of the Regulations Department
• Katja Würtz, Head of the Consumer Protection and Financial Innovation Unit
• Susanne Rosenbaum, lawyer
Ms Regina Skibińska was awarded the title of the Journalist of the Year in the 10th edition of the Contest of the Polish Insurance Association for journalists. The Management Board of the Polish Insurance Association awarded this title for articles published in “Rzeczpospolita” daily. And the first place in Leon Kozicki’s Contest for the best theses organised by the Polish Insurance Association went to Ms Agnieszka Zajfert of the Faculty of Economic Sciences of University of Warsaw for the thesis entitled “The bonus-malus system and the driver’s age in calculating the premiums for comprehensive coverage in Poland”. The thesis advisor was Professor of the University of Warsaw Wojciech Otto, Ph.D.
The second place in the Leon Kozicki’s Contest went to Mr Daniel Sobiecki of the Warsaw School of Economics for the thesis entitled “Modelling premiums for the third party vehicle insurance”. The thesis advisor was Professor Maria Podgórska, Ph.D. The third place went to Mr Wawrzyniec Gilewski of the Faculty of Law and Administration of University of Warsaw for the thesis entitled “Current problems in the field of retail insurance mediation services against the background of legal changes”. The thesis advisor was Ms Magdalena Szczepańska, Ph.D.
Like every year, in the Journalism Contest organised by the Polish Insurance Association, apart from the main award, two more distinctions were awarded. Award for the Best Insurance Article of the Year went to Ms Agnieszka Jasińska of “Dziennik Łódzki”. The Management Board of the Polish Insurance Association awarded a distinction for an article on insurance fraud entitled “A woman dies four times to obtain insurance compensation under false pretences”.
Award for the Insurance Newcomer of the Year went to Mr Jakub Wołosowski for articles published at “Wirtualna Polska”.
The Management Board of the Polish Insurance Association would like to extend their congratulations to all who participated in this year’s contests and encourage all to take part in next year’s edition.
This year, two institutions of key importance to the Polish insurance market development celebrate their 65th anniversary. The first is the Insurance Department, founded in 1948 at the Poznań University of Economics (then Academy of Trade) – the oldest research and didactic institution of this type in Poland. The other is Wiadomości Ubezpieczeniowe – the oldest Polish newspaper, published since 1947. For 65 years, this magazine has been serving as a source of professional insurance information to subsequent generations of insurers. The magazine is a member of the International Association of Press Publishers – Presse Internationale des Assurances (PIA), and it has been published by the Polish Insurance Association since 2005.
These anniversaries have become an occasion to organise a conference entitled ‘Insurance industry in 2025 – opportunities and threats’. The conference will be organised under the patronage of the Poznań University of Economics’ Rector, His Magnificence, Prof. Marian Gorynia, PhD, and the President of the Management Board of the Polish Insurance Association, Jan Grzegorz Prądzyński. The goal of the planned conference is to answer the question which direction the insurance industry will take and what its opportunities and threats are in the years to come. During the conference, two panels will be held: ‘Possibilities of the insurance industry development till 2025’ and ‘Threats to the insurance industry development’, with Prof. Karel Van Hulle as a special guest.
Prof. Karel Van Hulle is a lecturer at the Faculty of Business and Economy of KU Leuven and at the Faculty of Economy of the Goethe University in Frankfurt am Main, where he is a member of the Board of the International Centre for Insurance Regulation. Until 1 March 2013, he was Head of the Insurance and Pensions Unit of the European Commission (Directorate-General Internal Market and Services). He represented the European Commission within the European Insurance and Occupational Pensions Authority (EIOPA) and was a member of the Technical Committee of the International Association of Insurance Supervisors (IAIS). He joined the European Commission in 1984 after having served eight years for the Belgian Banking Commission.
Detailed information, conference agenda and contact data are available HERE.
We invite you to study the most recent PIU report on the bancassurance market in Poland.
Report on bancassurance after Q2 2013.
Polish insurers paid 19.5bn worth of claims and benefits in H1 2013 to clients and the injured – by 2.2% more than last year.
Key figures:
• On the motor third party liability insurance market, the number of damage is still marked by a downward trend (decrease by 3.25%)
The value of the total third party liability insurance payments also decreases, but at a slower rate (-1.24%)
• The average compensation for motor third party liability insurance increased from PLN 5,160 to PLN 5,268
• The number of life insurance policies with the insurance equity fund increased by 5.37%
(to 2.88m)
• Compensations for damage caused by natural disasters increased by 22%, to PLN 608m
Motor insurance market
Key figures:
• Third party liability insurance – 504 thousand claims and benefits paid for the overall amount of PLN 2.66bn.
• Comprehensive insurance – 356 thousand claims paid for the overall amount of nearly PLN 1.73bn
• The gross written premium in third party liability insurance amounted to PLN 4.17bn (a drop by 5.13%)
• The gross written premium in comprehensive insurance amounted to PLN 2.7bn (a drop by 7.08%)
PIU Comment:
A tendency can be seen on the third party liability insurance market to an increasing average payment despite a decreasing number of damage occurrences. Consequently, the insurers’ burdens under the third party liability insurance remain on a similar level despite diminishing number of collisions and accidents reported. In comprehensive insurance, the number of the damage reported decreased, but the value of claims paid remains at a practically unchanged level.
The technical result on comprehensive insurance was PLN 210bn after Q2 2013 and it was approx. 36% lower than a year ago. One of the reasons may be the ageing car park (older cars = lower comprehensive insurance premium).
The technical result on third party liability insurance was PLN 81.8m, compared to PLN 7m a year ago. ‘We should remember that the positive technical result for third party liability insurance does not guarantee the positive result at the end of the year. We had a similar situation in 2012 for example. The reason is unpredictability of the personal damage’ says Jan Grzegorz Prądzyński, President of the Management Board of PIU.
Property insurance market (exclusive of motor insurances)
Key figures:
• The premium for property insurance (exclusive of motor insurances) amounted to over PLN 7bn and was by 11.4% higher than a year ago.
• The number of insurance policies against damage caused by natural disasters remains on the level similar to that of the previous year (7.84m) The level of compensations increased by 22% (to PLN 608m). It is mostly due to flooding of Q2 2013.
• The value of claims paid for financial insurance (guarantees, loans and the so-called different financial risks) increased significantly although its number visibly decreased. It means a high increase of the single claim value.
PIU Comment:
Despite damage caused by natural disasters, the market remains safe and stable. The technical result on insurance against natural disasters remains positive (PLN 55m), although it is of course lower than a year ago (by 64.5%). ‘This year’s natural disasters are observable, but they do not exceed the level of everyday activity of insurers. A much more important problem is that, despite the raising frequency of natural disasters in Poland, the number of the insured does not increase’, emphasises Jan Grzegorz Prądzyński.
The increase of the average compensation on the financial insurance market may be the proof of deteriorating financial condition of entities covered by such insurance. However, we should take into consideration that such type of insurance is characterised by high damage rate fluctuations and their portfolio is still not significant compared to the entire insurance market.
Life insurance market
Key figures:
• Claims and benefits from all life insurances amounted to PLN 12.9bn
(increase by 7.57%)
• Payments from unit-linked products increased by 22.6% and reached PLN 3.7bn
PIU Comment:
The premium on the life insurance market was PLN 16bn after Q2 2013, which marks a drop by 18.2%. It was affected by short-term life insurance policies, i.e. products combining the features of a life insurance policy and a bank deposit. For this group of products, the decrease in premiums was the highest. The value of payments made increased in comparison to last year. In total, out of more than two million payments made, the clients and eligible parties received PLN 12.9bn, over 7.5% more than a year ago. The value of claims and payments was mostly related to unit-linked insurance: the clients were paid PLN 3.72bn compared to PLN 3bn a year ago.
Net financial result
The net profit of life insurers for the first two quarters 2013 amounted to nearly PLN 1.4m and was over 18% lower than a year before. ‘It is due to the results on investing activity lower than last year’, explains Jan Grzegorz Prądzyński.
According to the financial statements data, property insurance companies closed the first half with PLN 5.22 billion profit. We should clearly state that this result is mainly related to the dividend policy of the largest Polish insurance group. The profit of the entire property insurance sector, excluding that factor, amounted to approx. PLN 1.4bn after H1 2013 and was over 11% better than a year ago. Both life insurers and property insurers reduced the costs of their business activity.
In the first half of 2013, Polish insurers paid PLN 585m of income tax.
We invite you to study the most recent PIU report on the bancassurance market in Poland.
Report on bancassurance after Q1 2013.
The 23rd Economic Forum in Krynica – one of the most important economic events in Poland, annually hosting business and political leaders – was held between 3 and 5 September. As in previous editions, the Polish Insurance Association was a partner of the Forum and of its Healthcare Forum topic.
This year, the Association together with Lux-Med prepared a discussion panel entitled “Financial priorities of health economics – what will help the system? European models and Polish reality”, held on 4 September.
Discussion was focused on the issue fundamental for the entire healthcare system and health economics, i.e. implementation of common tools supporting financing, mainly additional health insurance. The panel constituted an opportunity to exchange opinions on the influence of the “queue to healthcare services” not only on the health of Poles, but also on the public funds, the Social Insurance Institution’s finances and the Polish economy. During the discussion, the participants noted that the public healthcare system inefficiency generates additional costs for the economy, as well as for the public finance system. The panel tackled also the issues of indirect costs reduction and introduction of solutions optimising the healthcare financing.
Among the participants of the discussion, moderated by Wojciech Szeląg, editor of Polsat News, were:
Zbigniew Derdziuk, President of the Social Insurance Institution
Dorota M. Fal, adviser to the Management Board of the Polish Insurance Association
Sławomir Neumann, Secretary of State in the Ministry of Health
Agnieszka Pachciarz, President of the National Health Fund
Jan Grzegorz Prądzyński, CEO of the Polish Insurance Association
Anna Rulkiewicz, CEO of LUX MED
Christian Wards, Business Development Director, International Markets Development, Bupa
