Insurance Market In Poland 2010-2012, CEE Insurance Series

Intelace Research
June 1, 2010
83 Pages - SKU: INTL2707291
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Countries covered: Poland

Market growth. In 2009, insurers registered in Poland recorded premium growth of 4%*YoY in the non-life segment. Premiums increased most rapidly in case of natural disaster, fire and other smaller insurance classes, including assistance, various financial risks, non-motor TPL, etc. At the same time, the largest part of the non-life segment - car insurance - experienced a fall in premiums. In life insurance business, premium went down sharply by over 22% YoY, which was almost exclusively the effect of falling sales of deposit substitutes. Premium in other (traditional) life insurance classes, including unit linked, health/accident , etc., continued to increase. If looking at the whole region, Poland remained the largest insurance market in the CEE15, with ~39% share in total premium written.

Competition & concentration. During 2009 the largest insurers (mainly PZU) continued to lose market share in favor of smaller players. In contrast, insurance companies associated with banks (e.g., BRE Ubezpieczenia, BZ WBK-Aviva), as well as foreign players (Liberty, AXA) continued to grow at very high rates. It is also worth noting that Ergo Hestia advanced to the #2 position on the non-life market, while TU Europa took the #2 position in the life market. Overall , concentration of both life and non-life markets (measured by HH index ) declined in 2009, indicating an increasing level of competition.

Profitability. In 2009, insurers profited from very favorable performance of stock and bond markets, as prices were rebounding after the sharp sell-off in 2008-2009. High gains on investments helped to improve financial results of life insurers and compensated for losses in the technical account experienced by non-life insurers. However, on closer look, the situation of non-life insurers has deteriorated. Widening deficit in technical account was driven by both growing claims and not properly adjusted expenses, including accelerating acquisition costs. As a result, the combined ratio (CR) in non-life business exceeded 96.5% (it also went clearly over 100% in the car insurance segment) - levels not seen for many years.

Sales channels. Direct insurance sales (phone, internet) continued to grow faster than the overall market. The big choice of price-comparing websites, availability of specialized insurance supermarkets and wide marketing campaigns of direct players has so far only limited impact on sales channels mix. According to official statistics, the vast majority of clients is still buying insurance in a traditional way. In 2009, the share of non-life premium acquired by direct channels (internet & phone) amounted to only 2.2%, as opposed to 1.6% in 2008.

Future outlook. The future, in particular the year 2010, will definitely not be easy for insurers operating in Poland. The recovery of the economy will be most probably only moderate, implying only slight recovery in the real estate and car markets, over the next few years. Persisting high level of claims, more natural disasters, lower investment results and stagnating insurance premiums will require further automation of processes and more cost control at non-life insurers. Perspectives for life insurance business are a bit better. Pension and health reforms that seem unavoidable will imply additional need for personal saving and protection products, and life insurers are well positioned to offer it. Moreover, margins in the life insurance business are less vulnerable to erosion due to higher complexity of products.

Intelace Research expect that after stagnation in 2010, the growth rates of gross premium written (GPW) will increase to 6% and 10% p.a. in non-life and life business, respectively, in the years 2011-2012. Mid-term profitability of life insurers is likely to remain stable. In contrast , profitability of non-life insurers is expected to worsen further.


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