For many years, Poland has been a rather low-premium market due to high competition and rather good results in most lines of business. This has changed by now in industrial insurance, where international standards and practices are being increasingly adopted.
Polish insurance market: premium and insurers in 2021
The Polish insurance market achieved a premium volume of 22.1 bn. PLN (8 bn. EUR) in Life insurance and 47.1 bn. PLN (10.2 bn. EUR) in Non-Life in 2021. Claims and benefits paid by Polish insurers amounted to approximately PLN 41.3 bn. At the end of the year, the combined assets of Polish insurance companies amounted to PLN 201.6 bn. Insurance penetration stands at 3.7 %, thus reflecting the country’s overall picture as one of the well-advanced economies among the Eastern European countries.
There is a consolidation tendency in the insurance market, as shown by the recent takeovers between international groups: Nationale Nederlanden bought MetLife, Allianz took over Aviva and Uniqa purchased AXA. Uniqa´s takeover of AXA had an impact on the overall market in terms of Insurers´ more selective approach while mainly focusing on the loss ratio and financial situation (related to the surety bonds). Moreover, lack the of AXA on the market, also caused problems with a lower number of offers and a lack of alternatives, especially for bigger contracts in CAR insurance. Despite these changes, most European insurance groups are active in Poland, contributing largely to the capacity of the market along with major Polish insurers PZU.
For many years, Poland has been a rather low-premium market due to high competition and rather good results in most lines of business. This has changed by now in industrial insurance, where international standards and practices are being increasingly adopted. More underwriting information is required to support a policy of selective underwriting, but still, there is no withdrawal from certain branches or occupations. Increases in deductibles and prices indicate a more moderate development than in other countries. The capacity of insurers remains similar to the previous years, but the risk appetite is more selective.
The state of construction insurance
Looking at the construction market in Poland, hydro-technical and tunnelling contracts still seem to be estimated as the riskiest. So far, the market has been hardening quarterly and, as a result, substantial rate increases can be observed in the majority of the contracts. Other negative changes contain more limited cover, higher deductibles and additional sub-limits. The line projects (mainly road projects) are estimated as more difficult and the insurance is referred to as unprofitable due to the significant losses in CAR. The concentration is also raising as the local CAR market in respect of the construction insurance is dominated by WARTA, ERGO HESTIA and GENERALI with some minor share of other Insurers. This tendency could lead to the situation where the conditions for many types of contracts can be comparable to foreign markets which would, in turn, make them more attractive.
The problem that currently affects the Polish market, and also affects insurance, is the value of inflation, which in May was almost 14%. As a result of an increase in the price level of construction materials and higher labour costs, there is an unpredictable increase in the value of the insured property or construction work. Due to the unstable situation in this respect, difficulties arise in determining the appropriate sum insured to avoid underinsurance. The obtained compensation may not fully cover the costs of repairing the damage resulting from fire or flooding or other damage resulting from the insurance contract.
For liability risks, the situation is stable and without changes. On the property side generally, a trend of rising prices was observed mainly due to an increase in severe weather events in territories that were previously not considered exposed. However, the overall rates are still competitive compared to Western European markets.
The same trend of increased rates applies to Health & Benefits where the overall influence of Covid-19 connected death and excess mortality, hospitalization, and the increase of serious illness cases have impacted the Polish market. Prices of Medical Packages are increasing due to rising medical costs and overall inflation. At the same time, there have been new products and coverages in Health & Benefits packages: oncology, cardio, diabetes packages, etc.
The situation in energy insurance
With regards to the historically well-known high competitiveness in the Conventional Power & Renewable Energy insurance, it can be said that the unsustainable reduction of deductibles led to losses due to insufficient premium volumes to cover underwriting expenses. In 2020, a change in deductibles and rate increases were observed on the market after another negative underwriting year. Poland plans to increase its renewable power capacity by 65% between 2020 and 2024, with most advances gained through the development of offshore wind farms. The country is finalizing its 2040 energy policy and looks to partner with the world’s largest Renewable Energy companies to develop the market.
One of the great changes the Polish economy will have to face is the transformation from coal as the country’s most important energy source, to other, “green”, sources. Although this will take some time, opportunities for innovation of both the technical bases and insurance solutions will positively influence the insurance market. Still, one of the main concerns of the insurers is to obtain higher market shares, which leads on the one hand to product innovation and product enrichment in Life insurance and a wild price war on the other.
In financial lines, we are experiencing rate increases as well as lowering of capacities just as at the Western markets, however, the Polish market still seems to be amongst the softest. D&O is experiencing certain changes, but they are not as harsh as foreign markets would expect. Cyber is still a market with quite a low penetration, however as the clients’ interest is increasing, the insurer’s appetite is decreasing, especially due to the low level of IT security standards at some local companies.
In the mentioned market segments, the following price increases are observed:
Georg Winter offers some insights into his vision for GrECo. Interview was originally published in Lockton Global Partners Magazine.
Ante Banovac shares his thoughts about future risks facing the insurance industry and the state of the insurance market in Serbia, Slovenia and Croatia
How bad was drought this year in your region and how much insurance would help to protect against losses?
Such a big drought leads to many negative consequences in many industries, especially in agriculture, energy, logistics, and forestry.
General Manager GrECo Poland
T +48 661 992 282
Energy & Mining Specialty
T +48 723 979 990