Polish Insurance Association June 2012
Polish insurance market: growth and potential
1. Polish insurance market – general information 2. Non life insurance in Poland
3. Life insurance in Poland 4. Regulatory framework
Table of contents
2
POLISH INSURANCE MARKET – GENERAL INFORMATION
3
4
20 years of liberalized insurance market
Insurance law of 1990:
•
Liberalized insurance market and opened the market for foreign investors
•
Introduced legal division between non-life and life insurance
•
Introduced prudential regulations and established insurance supervision
Year 2011 (euro) Life Non life
Insurers 29 33
GWP 7.7 bln 6.1 bln Reserves 17.7 bln 8.8 bln Year 1991 (euro)
Life Non life
Insurers 4 16
GWP 0.2 bln 1.2 bln Reserves 0.01 bln 0.6 bln
Polish insurance market – general information (1)
Polish insurance market – general information (2)
5
Fast growing market (GPW in bn PLN)
• Poland is a medium size market in Europe with a 1.2% share in European insurance market insurance measuerd by GPW.
• The life segment was constantly growing untill 2009 slowdown, moderate recovery since 2010.
• Non life segment was less affected by current economic crisis.
Source: Polish Financial Supervision Authority
Decrease mainly due to slump in bancassurance (GPW in single premium life products – mainly anti-tax products - went down by
32% in 2009 YoY)
6
Life and non life segments – GWP structure
Life segment increased its share in total GWP from 34% in 1995 to nearly 56% in 2011
Source: Polish Financial Supervision Authority
Polish insurance market – general information (3)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
GWP - Life GWP – Non life
Polish insurance market – general information (4)
7
Insurance penetration
Insurance penetration - premium to GDP ratio (2010)
Source: Insurance Europe
• Polish insurance penetration is below the world average but very high as far as the region is concerned.
• In 2010 Polish insurance market has leading position in Central-eastern Europe and the Baltic states with 43%
share in total premium within the region.
3,8%
Insurance Europe average 8,2 %
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Netherlands United Kingdom France Finland Switzerland Portugal Denmark Belgium Sweden Ireland Italy Germany Slovenia Austria Spain Malta Luxembourg Cyprus Norway Czech Rep. Poland Hungary Slovakia Estonia Iceland Croatia Greece Bulgaria Latvia Romania Turkey
Insurance density
Polish insurance market – general information (5)
8
Insurance density - average total premiums per capita (in EUR, 2010)
Source: Insurance Europe
355
Europe Insurance average 1 873 EUR There are huge differences in insurance density from country to country.
Excluding Liechtenstein, it ranges from EUR 93 in Romania to EUR 5 071 in Switzerland (effect of its privatised health insurance system).
Central-Eastern Europe and the Baltic states are still lagging behind.
Poland: Life – EUR 206 per capita Non life – EUR 149 per capita
0 1000 2000 3000 4000 5000 6000
Switzerland Netherlands Luxembourg Denmark Finland United Kingdom France Sweden Ireland Norway Belgium Germany Italy Austria Portugal Spain Cyprus Slovenia Iceland Malta Czech Rep. Greece Slovakia Poland Estonia Hungary Cratia Latvia Bulgaria Turkey Romania
Insurance sector aggregated financial results (non-life and life)
9
Year 2011 (euro)
Gross written premium 13.9 bln Gross claims and benefits 8.2 bln
Net profit 1.5 bln
Total assets 31.6 bln
Own capital 7.5 bln
Polish insurance market – general information (7)
With total premium amounting to 13.9 bln euro, Poland is the biggest insurance market within Central-eastern Europe and the Baltic states.
Number of insurance companies
10
Polish insurance market – general information (8)
Among 62 insurers licensed in Poland only 8 are mutuals.
Decrease in number of insurers:
market consolidation effect
Moreover, on the Polish market there are (2011):
• 21 branches of foreign insurers
• ca. 550 notified insurers 6 insurance companies went
bunkrupt
Last bunkruptcy (TUiR Polisa SA) was declared in 2000
Number of foreign insurers Number of domestic insurers
Mutual Insurance Companies in Poland
11
mutual company active since
Macif Życie TUW 2004
Rejent Life TUW 1995
Concordia Polska TUW 1997
Cuprum TUW 1994
Pocztowe TUW 2003
SKOK TUW 1996
T.U.W. TUW 1992
TUZ TUW 2003
Concordia Capital S.A. 2001
SKOK Życie S.A. 2000
Polish insurance market – general information (9)
Polish mutual companies are small operators with limited market share in total market, but with strong ties to their local and social environments.
NON LIFE INSURANCE IN POLAND
12
Non-life market is dominated by motor insurance Non life insurance in Poland (1)
13 Source: Polish Insurance Association
• Motor insurance dominates the market although its share in total non-life premium has been constantly decreasing
• Share of premium from financial risk insurance has doubled since 2005
Motor insurance: premium level stabilization and gross claims paid growth (PLN bln)
Non life insurance in Poland (2)
MTPL premium
14 Source: Polish Financial Supervision Authority
• Poor car market responsible for the stabilization of motor insurance premium growth
• Visible tendency of increase in MTPL and Casco claims tempered in 2011
• After the period of low tariff policy, in 2010 insurers started to rise prices for motor insurance cover
MTPL claims AC premium AC claims
2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011
Non life insurance (3)
15 Non-Life Combined ratio (%) Non-Life technical result (PLN mln.)
96.9
87.6
92.5 91.5 99.4
106.3
2011
2006 2007 2008 2009 2010
Effectiveness factors indicate critical 2009-10 years for Polish non-life insurance.
2009 increase mainly due to growing claims in motor insurance and higher acquisition costs, 2010 increase mainly do to catastrophic claims.
Non life insurance in Poland (4)
Key development driver, opportunity and challenge
16 Key
development driver
Substantial increase in private assets (especially cars number)
Opportunity Premium penetration significantly lower than in Western Europe – room for growth
Challenge
Motor market: price competition (among others due to development of direct distribution channel) combined with increase in claims resulted in negative technical result in 2009-10.
LIFE INSURANCE IN POLAND
17
Life insurance in Poland (1)
• Life insurance gross written premium is rapidly increasing.
• The market slumped in 2009 due to the economic recession.
Nevertheless, compound average growth rate (CARG) for 2001-11 scored 13,4%
Growing life insurance market
18 Source: Polish Financial Supervision Authority
9 10 11 13
15 21
26 39
30
Gross written premiums (in PLN billion)
2001 2002 2003 2004 2005 2006 2007 2008 2009
CAGR 13,4 %
1991 0.2
2010 3131
2011 32
Life insurance in Poland (2)
Life premium structure: individual vs. group
19 Source: Polish Financial Supervision Authority
Group insurance includes mainly:
1. group insurance joint by employees in their companies:
traditional Polish product - close to 100% of participation by employees in the socialist times
2. bancassurance Gross written premiums (in PLN billion)
Group insurance Individual insurance
Life insurance in Poland (3)
Growing life insurance market – what is behind the growth?
20 Source: Polish Financial Supervision Authority
Single premium products are responsible for growth in life market
• In 2004 a 19% capital-gains tax was introduced with an exemption for life insurance products.
• This paved the way for life insurance contracts with single premium distributed by banks.
• Expansion of single premium products stopped in 2009.
Gross premium written in PLN billion
Periodical premium insurance Single premium insurance
21
Life insurance in Poland (5)
Key development driver, opportunity and challenge
Key development
driver
Wealth increase in the society
Opportunity High potential for the market increase
Challenge
Premium volatility caused by high share of single premium products related to tax optimalization which give relatively low
yield for insurance companies
REGULATORY FRAMEWORK
22
Regulatory framework (1)
23
Polish Motor Insurers’ Bureau
• Green Card System
• Deals with claims involving vehicles registered abroad
Insurance Ombudsman
• Investigates market irregularities and individual complaints
Insurance Guarantee Fund
• Pays indemnities under compulsory MTPL insurance when the vehicle’s holder is not identified or insured
• Settles claims in case of bunkruptcy of insurance company
Polish Insurance Association
• Industry representative organization
• Assists legislative works
• Increases common understanding of the sector
Polish Financial Supervision Authority
• Ensures regular operation of the market
• Undertakes measures aimed at market development
Polish Financial Supervision Authority
• Ensures regular operation of the market
• Undertakes measures aimed at market development
INSURANCE COMAPNIES
Insurance market institutional framework
Office of Competition
& Customer Protection
•Ensures market competition
• Protects customers’ collective interests
• Register of prohibited clauses
Polish Insurance Association (PIU)
• PIU was established in 1990
• PIU is an insurance industry representative organization
• PIU’s activity is regulated by Act on the Insurance Activity
• All insurance companies licensed for an insurance activity in Poland are members (compulsory membership)
• Currently 77 insurance companies belong to PIU
• 8 members are mutual insurance companies , their working body is PIU Mutual Companies Commettee
• Since 1998 PIU has been a full member of Insurance Europe (formerly CEA) - the European federation of the national insurance associations
24
Regulatory framework (2)
25
Regulatory framework (3)
2011 – ca. 70 national and international legislative drafts in consultation
• New insurance activity act (implementation of Solvency II)
• Amendment of compulsory insurance law
• Introduction of private health insurance
• Fulfillment of pension insurance reform
• Changes to insurance contract law (Civil Codex)
• Introduction of a state-aided system for catastrophic risks
• New supervision architecture of financial institutions
• New financial principles and risk management (Solvency II, Omnibus II, IAS, IFRS)
• Review of consumer rights, information and intermediation regulations (IMD2, MiFID2, PRIPs)
• Antidiscrimination regulations
• Data protection regulations Current major domestic projects:
Current major European projects:
26
Regulatory framework (4)
• Simplification of regress procedures between MPTL insurers
• Standarisation of indemnities from personal injuries
• Introduction of first-party motor insurance
• Best practices in bancassurance
• Best practices in traditional group insurance
• Best practices in customer complains and ADR
• Standarisation of information exchange in fraud detection
• Data standarisation in IT systems of insurers
• Best practices in marketing of insurance services
• Best practices in cooperation between insurers and insurance intermediaries
• Business statistics data bases Current self-regulation projects:
