A comprehensive guide to insurance in Poland

How do the current political developments and economic conditions in Poland influence the insurance industry and clients’ risks?

PALUSZYŃSKI: The GDP has been growing between 4-5 % per year over the last 3 years. In the COVID-19 pandemic period, the Polish financial system entered into good shape, resistant to shocks and without significant imbalances. However, the World Bank has revised its forecasts for Poland’s GDP for 2020. According to the WB, the economy will see a 4.2% decline in GDP over this period. Growth will return to 2.8% in 2021. In 2019, the value of collected insurance premiums amounted to EUR 14,8 billion (EUR 0,3 billion more than the year before), of which life insurance accounted for more than 33%, and property insurance for about 67%. It is difficult to estimate how the Covid-19 pandemic will affect the insurance market this year – data for Q1 2020 were optimistic.

In which economic segments do you expect increasing investments in the coming years?

PALUSZYŃSKI: Poland is a coal country: around 70% of its electricity comes from either coal or lignite. By 2018, renewables accounted for 20% of electricity generation, mostly from wind energy. The importance of gas is growing. Its share in the energy mix was 7.2% compared to 5.6% in 2017.

Taking into consideration changes in the climate strategy (Energy Policy of Poland until 2040) and investments which are related to this policy it is a big opportunity for GrECo Poland to be part of the process. Assumed spending in the field of investments related to CO2 reduce until 2050 is estimated at approximately 116 billion EUR.

The construction sector in Poland provides many of the opportunities especially now in the COVID-19 times as one of the engines of the Polish economy. At the moment, the situation in construction in could be better, like in the overall economy. But this also can create more selectiveness and financial impacts of the part of the sector. During 2020 there were delays in procedures and almost no new contracts have been signed. Now the construction companies can focus on increasing their backlog and securing a positive cash flow and also can be prepared for the price war as there is a big competition on the market.

What are the biggest risks foreign companies doing business in Poland need to consider?

PALUSZYŃSKI: Risks for foreign companies do not differ from those, that Polish companies face. The biggest risk is unstable legal environment which makes the situation here in Poland very challenging for all investors.

What are the main facts of the insurance market in Poland?

PALUSZYŃSKI: The overall financial results of insurance companies in 2019 were better than a year ago. Higher results were obtained by both life insurance companies and non-life companies. A growing importance of non-life insurance in the entire insurance sector has been noted.
At the end of 2019 total assets of Polish insurance companies amounted to EUR 43 billion (in 2018 it was EUR 42,7 billion). In 2019 claims and benefits paid by Polish insurers reached almost EUR 9,3 million. Accessible data for 2018 showed the combined ratio of 103,3% for total Polish Insurance market (Life – 123,5%, Non-Life 91,9%).

What specifics differ from those in other countries?

PALUSZYŃSKI: All insurance regulations are is in line with the EU regulations, IDD & GDPR were implemented. For sure there is some differences to other countries: there is no insurance tax in Poland, brokers must pass the professional exam organized by Polish Financial Supervision Authority (KNF) and must have an obligatory Professional Indemnity policy.

Brokers account for about 17% of all insurance (Life and Non-life) sales in Poland. Is the share the same in life business?

PALUSZYŃSKI: We do not have the data for 2019, but the value of premiums placed in insurance companies through brokers in 2018 amounted to EUR 2.377 million which means an increase of the indicated category by over 50% in relation to the previous reporting year. In Section I (Life) there was an increase by 31,09% and in Section II (Non-Life) an increase by 59,13% as compared to 2017.

The early 90’s Polish insurance market opened itself to foreign companies entering the market. The know-how, new approach to risk pricing, innovative products, IT developments, competition, these factors shaped not only the market players but also influenced our clients. There was a growing educational effect and insurance knowledge among clients. That reflects in their approach to insurance, high service level demands and overall readiness to conclude insurance contracts. The new products, regulations and laws being introduced make it difficult for clients to choose products, suppliers. The role of the intermediary is to collect, compile and present their recommendations to clients, conclude contracts on their behalf and provide service and advice pertaining insurance matters.

GrECo’s role is to help its clients to find the best resolution to their changing needs making sure these are in line with laws and regulations. GrECo also needs to closely observe changing conditions surrounding our clients and inform them accordingly. For example: In the COVID-19 pandemic Greco has proactively take the following measures: outgoing information about epidemic and Insurers T&C exclusions, information about COVID-19 products availability and setting up new policies in 1st week of product life.

COVID-19 pandemic has also shown the weakness of the state run health system, or rather it’s collapse. This certainly would mean private health providers are going to be considered not only as alternative but a definite necessity. Obviously, it means that providers need huge investments and further development of their networks and services. Medical insurance, subscribed medical services should be considered as one of the business areas that would enjoy rather steady perspective of growth. In terms of market reality there is growing competition, definite leaders but also a fair number of small locally operating medical centers frequently cooperating with market leaders are building up.

Can international insurance programs be implemented?

PALUSZYŃSKI: Polish legislation does not specifically address international insurance programs, so this kind of insurance coverage is subject to the same rules as any types of insurances.

It should be underlined that unauthorized insurers cannot carry on insurance activity in Poland.
Insurers from European Economic Area (EEA) states (European Union member states and Iceland, Liechtenstein and Norway) may provide insurance under freedom of services legislation, provided that they have filed an appropriate application to the supervisory authority in their home country.

An insurance company with headquarters in a non-EEA country may undertake and perform insurance activities in Poland only through a main branch, following an authorization from the supervisory authority.

International programs are quite common for international companies, but they do not always take into consideration the local specifics and risks. It is our job as brokers to address this to the client and the controlling broker.

What regulatory challenges are companies facing? What types of insurance are mandatory?

PALUSZYŃSKI: Entrepreneurs may face a lot of challenges in the Polish legislation. Mandatory insurances are one of them. Different insurance experts recall different numbers of compulsory insurances, which give us the idea of how tricky this area is. A report prepared by the Polish Chamber of Insurance calculates that about 160 mandatory insurances are in force in Poland, which includes different types of liability, property and accident insurances that arise from local legislation, EU legislation, as well as international law and international agreements.

How do you cope with these regulatory issues?

PALUSZYŃSKI: We as GrECo Polska support our clients to find themselves in the legislation thicket. As professionals we have to be up to date with the current legislation status and ready to advise our clients if they subject to any compulsory insurance and if not, what other risks we can identify.

Please describe GrECo incoming business servicing capabilities?

PALUSZYŃSKI: GrECo Polska has been servicing incoming business since the beginning of its presence in Poland. We employ currently 53 high skilled professionals. International accounts are handled by multi line account managers with many years of experience in insurances (some of them have been working for GrECo for more than 15 years). They speak Polish, English, German and Russian.

Apart of standard policies based on master programs (PD/BI, CGL) we handle Construction /Erection Risks, D&O, Cyber, Employee Benefit and many others specialized insurance lines.

In GrECo Pl are also prepared to handle non-standard international premium payments, for example:
– premium for non-admitted policy to be paid by local (in Poland) entities directly to foreign insurer in USD, but GrECo coordinates issuance of premium invoices and premium monitor premium tracking
– premium paid directly to GrECo Poland by customer’s HQ abroad
In local policies based on master programs, GrECo asses local clients activity to extend local policy with necessary additional (ex. Tenant’s Liability, Employer’s Liability etc.).

What do you at GrECo focus on when advising clients and what special expertise have you developed?

PALUSZYŃSKI: We pay special attention to the analysis of the risks which may affect on clients. By creating a recommendation for an optimal insurance programme for them, we offer protection ensuring coverage of all his risks or draw their attention to GrECo’s service approach: risk analysis, insurance strategy, insurance solutions, claims management and insurance controlling.
An important part is using of GrECo internal IT solution to manage our client relationships. And when risk materializes and damage occurs, we are always with our client.

In last years we focused on developing Specialty insurance, specifically Energy, Power & Mining and Construction & Real Estate. Very important are our competences in Health & Benefit, Financial Institutions/ Financial Lines and recently – Affinity Business Insurance.