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PIU
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CONTROVERSIES OVER AMENDMENT TO TRAFFIC LAW
Diet’s decision made on Thursday concerning the so called „tow-away” issue and rejecting all the amendments proposed by the Senate, means consent for driving a vehicle without MTPL insurance agreement. Diet has practically lifted any sanctions related to the lack of policy which, for the record, is compulsory in Poland. Indeed, a ticket amounting to 50 PLN is foreseen by the law for a driver who lacks a policy certificate. If the vehicle is uninsured he driver will be fined by UFG (Insurance Guarantee Fund). However, the problem is that the recoverableness of such fines does not exceed 50 per cent. Simultaneously, the new-shaped law does not regulate the most important issue, i.e. exclusion of uninsured vehicle from the traffic. Diet has assumed the Police to be able to check up in the electronic data base if the vehicle is insured. Meanwhile, PIU has repeatedly stressed it to be infeasible as the Police has not online access to CEPiK base.
PIU has lobbied for several ,months for the amendment to Traffic Law to be shaped in such a way that the vehicle, whose driver lacks an MTPL insurance certificate, should be excluded from traffic by the Police. Withdrawal of car license against a receipt would be the best solution. The Chamber agreed with Parliament’s pleading for „tow-away” penalty to be exceedingly oppressive for the driver. However, the Diet has found any sanctions to be unnecessary. What does it threaten with? Presently, there are approx. 200 thousand uninsured vehicles in Poland. Statistical data can be expected to take a turn for the worse soon after the new-shaped regulations have been implemented. In the case of an accident caused by the driver of an uninsured car there occur huge costs to be incurred. Vehicle repair, victim’s rehabilitation and medical care and, finally, a life annuity are the costs to be incurred by the driver from his own means. Through the Thursday decision made by the Diet, some drivers, especially those young and inexperienced ones, will pay for their errors for all their lives. There is only one way to be protected from such a scenario, i.e. by concluding an MTPL insurance agreement.
Moreover, the draft amendment, as adopted by the Diet, remains in contradiction to the current legal order prevailing in most EU countries, where the regulations related to compulsory motor insurance are getting more and more strict. The regulations allowing such measures as seizure, temporary forfeit, confiscation of registration plates and withdrawal of vehicle license to be taken in respect of uninsured vehicles, have been in force for many years in many countries. Poland is going upstream this tendency and the Diet contributes to the level of safety on Polish roads to be lower.
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"WIADOMOŚCI UBEZPIECZENIOWE" AVAILABLE ON PIU WEB SITE
The first issue of „Wiadomości Ubezpieczeniowe” science quarterly magazine is already available on PIU web site. You are invited to enjoy it.
PIU also distributes, free of charge, the hard copy of „Wiadomości”. In case of your interest please, contact Mr Marcin Kapiński under the following email address: (mkapinski@piu.org.pl).
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PIU REPORT: SALE OF INSURANCE IN POLAND IN 2008
Insurance agent’s services are the most popular, if we desire to insure an apartment or a car. The leading intermediary in the area of life insurance are banks and financial institutions – as results from preliminary data gathered by Polish Chamber of Insurance.
Non-life market
- agentsInsurance agents (natural persons) generated as much as 42 per cent of total premium collected by non-life insurers in 2008. It is worthwhile to stress that the position of agents was still stronger the year before. Their share in the sales exceeded 44 per cent.- direct (phone and Internet)As far as direct sale is concerned, the Poles have obviously accustomed to Internet as a policy sale distribution channel, mainly in respect of motor insurance. Non-life insurers collected nearly 23 million PLN of premium through this distribution channel in 2007. It was as much as 52.5 million PLN in 2008. However, it should be added that the share of internet sales is still very low in Poland, in spite of its increase by above 2.-fold. It is also less popular than the phone. Sales by the phone increased by one third on year-to-year basis and amounted to almost 350 million PLN.These data do not take into account the business of Axa Ubezpieczenia and Liberty Direct. If the business of these two branches in 2008 is taken into account, the value of direct market in Poland can be estimated at 544.26 million PLN. It results from PIU estimations (based on financial reports of the domestic insurers) that approx. 15 per cent of this amount are the policies purchased by internet and 85 per cent were purchased by phone.- brokersThe importance of brokers has also been enhanced in Poland in the area of non-life product sales. Presently, brokers generate above 2.4 billion PLN of premium for insurers which means 11.8 per cent of total premium collected.
Life market
Banks and other financial or credit institutions have the dominating position on life insurance market. Above one third of all individual policies and above a half of all group policies are sold through this distribution channel. Insurance agents (natural persons) have lost a little in their importance which is the result of a dynamic development of bancassurance in Poland.
Direct sale (internet and phone) is still of minor importance on the market of life policies. It is like the distribution by brokers.
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PIU CUP: INDOOR FOOTBALL TOURNAMENT FOR INSURERS
Polish Chamber of Insurance is organizing an indoor football tournament for 6-person teams called PIU Cup. The teams of all insurers running their business in Poland are invited to participate in the tournament. The tournament will be organized for the first time and the organizers hope it to enter the calendar of insurance market events.
The tournament will take place on 20 June in the sports hall at 1/3 Księcia Bolesława Street in Warsaw. Competition will begin at 10.00 AM. The teams will consist of six players with maximum representation of 11 players (5 reserve players).
Teams are to be notified to Mr Adam Orlikowski to the following email address: adam@halapilkarska.pl. For more information, click here.
Precious prizes to be awarded!
Sport competition will be followed by an outdoor cookout event. That is why not only players are invited but also their families and fans.
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THE VIII EUROPEAN BANKING AND INSURANCE FORUM
Polish Chamber of Insurance has accepted the patronage of Honor of the VIII European Banking and Insurance Forum. Grupa Kapitałowa Europa is the organizer of the event entitled: „The Past to Determine the Future”. The Forum will take place on 19-21 May at Ossa Hotel in Rawa Mazowiecka. More information and the detailed program can be found on the organizer’s web site.
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POLAND
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DIET TO DEAL WITH TAX CONCESSION FOR PENSION
Diet’s Speaker has recommended a debate on draft law introducing a tax concession for the persons saving for an additional pension. The draft assumes the amount of 12 thousand PLN to be deducted from the basis of taxation, provided that this amount is paid for a III Pillar pension insurance. Civic Legislative Initiative Committee RAZEM made the draft be signed by 120 thousand people.
Tax concessions are to encourage the Poles to save extra money for their pensions. The average substitution rate foreseen by the new pension system (ZUS and OFE) will amount to approx. 50 per cent. It used to be 60-70 per cent in the old system. Meanwhile, the minimum substitution rate in terms of social expectations amounts to 75 per cent. That is why additional savings are necessary. As reported by the Committee, the amount of 100 thousand PLN must be saved in order to have a pension increased by 500 PLN. In experts’ opinion, the introducing of the tax concession would lead to a significant development of long-term pension savings market. It would also increase the number of people saving within IKE (Individual Pension Accounts).
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NEW DUTIES FOR SUPERVISORY BOARDS
The amended Accounting Law has been in force since 2 May last year. New regulations are applied to financial reports drawn up for 2008.
Tomasz Rzepa and Krzysztof Lipski from KPMG explain that in view of the new regulations not only board members but also the members of supervisory board are responsible for financial report and business report of the company to be drawn up. This amendment imposes the obligation on supervisory board members to make sure all the rules of preparing reports, as recommended by the Law, have been complied with.
Marek Czerski, PTU board president, PTU supervisory board member, points out the responsibility of supervisory board members has been enhanced by the new regulations. In his opinion, the amendment to the Accounting Law should raise the standards in respect of financial reporting.
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SWISS RE: CONSOLIDATION IN GLOBAL SERVICE CENTRES
Swiss Re has announced its plans, also towards Poland, related to its dominating position within reinsurance sector to be strengthened. A number of measures have been taken by the group aimed at strengthening its position in terms of capital, lowering the property risk and ensuring a higher level of financial safety, as its response to the difficult market conditions and in order to be able to offer the best solutions in the field of risk and capital management. Swiss Re has declared to concentrate its resources in large offices and to consolidate some selected services at global service centers, in order to make use of the economy of scale.
On 31 July 2009 Swiss Re is to close its office in Warsaw which has provided consulting services in respect of life insurance for Polish clients, so far. „Polish reinsurance market remains the subject of interest for Swiss Re. Our engagement and acting to the advantage of Polish clients and providing them with top-quality services by making use of the employees’ language skills, their knowledge of the country and its culture as well as their deep knowledge of the market, remains unchanged." – said Johannes Hartmann, director of client management on the Polish market.
Swiss Reis the largest reinsurer in the world. The company provides full range of services related to the traditional reinsurance.
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BLIND PERSONS TO BE ASSISTED BY INSURERS
Insurance sector representatives are eager to support any charity actions. They will join soon the annual event organized by Blind Persons’ Care Society in Laski. On Friday, 15 May, ZAKOPOWER pop group is going to give a pro bono concert at Palladium cinema in Warsaw. Gate money will support the construction of Early-Intervention House at the Branch of Laski situated in Gdańsk Sobieszewo.
Insurers and other institutions of the sector have purchased above 900 from 1100 of the tickets sold. Generali was the first to buy a significant part of the tickets. The employees and guests of Axa Polska and its sister company Inter Partner Assistance are supposed to be the largest part of the audience. The employees and guests of Allianz, rankomat.pl, Europ Assistance, MetLife and Commercial Union are to appear at the event (the latter will insure the event charitably).
Insurers support for the centre of Laski is not limited to the participation in charity events. „We are very grateful for financial support we received from insurance companies after the fire suffered by the school at Laski. We appreciate the permanent co-operation (as well as a regular volunteering) we have with Pramerica and Warta, as well as PZU.” – informed the Board of Blind Persons’ Care Society in Laski.
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SUCCESSFUL BROKER EXAM
On 5 May the Financial Supervision Authority organized an insurance broker exam for the second time in 2009. The exam had the form of a written test consisting of 100 single choice questions. The score of 75 points had to be reached, i.e. three fourths of questions answered, in order to obtain the positive result.
This time the exam was participated by a record number of 170 candidates. The positive result was reached by 52 persons. The maximum score was 87 points. Candidates for insurance broker had to show, among others, the detailed knowledge of regulations regarding compulsory insurance and of statistical data. Among the statistical data the candidates were required to know, e.g. the amount of premium collected by non-life insurers in 2007, the average gross premium written per capita in 2007 and the share of the largest insurers in gross premium written in respect of particular insurance type. As usually, a significant part of the questions was about transport insurance, business interruption and construction and erection insurance (CAR, EAR).
After the last exam KNF has decided, for the first time, to publish the results of broker exam on its web site
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NEW PRODUCTS
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Commercial Union - Spokojny Czas (Time of Quietness)
Additional premium insurance in the case of job loss, offered to the clients concluding a new life insurance agreement called Nowa Perspektywa. If the insured loses his or her job for the reason on the side of employer, and meets some additional conditions, Commercial Union will pay premiums of life insurance and of additional agreements for the period of up to 12 months, until the insured finds a new job.
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BRE Ubezpieczenia and MultiBank - Pakiet Bezpieczeństwa (Safety Package)
The package combines the private life TPL coverage and ATM cash cover for credit card holders. In the first case, it guarantees the coverage for losses caused by the insured or his close person, up to the amount of 20 thousand PLN. Pakiet Bezpieczeństwa (Safety package) will guarantee the lost ATM cash to be returned including payment commission, up to the amount of 2 thousand PLN.
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BZ WBK Leasing and Concordia TUW - Ochrona Prawna (Legal Protection)
Insurance covering legal protection in respect of indemnity payment and, moreover, in respect of criminal suits and tax cases and the cases related to driver’s license and car license. It is offered to leaseholders of cars and trucks, buses, motorcycles and mopeds, tractor units, as well as trailers and semi-trailers, both new and used. Protection covers the events which occur not only on territory of Poland but also abroad.
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Warta and Kredyt Bank - Złoty Procent (Golden Interest)
This is a unit-linked life insurance of approx. 4-year duration. The assets are invested in a Luxembourgian fund with a 100 per cent capital protection. Return on investment ratio will depend on the changes in the value of the 6-month WIBOR rate. Maximum increase of fund unit value on insurance expiration date, i.e. after 4 years of savikng, may amount to 40 per cent.
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Allianz Bank – personal account including „Pensja na gwarancji” (guaranteed salary) option
Pensja na gwarancji (guaranteed salary) is a job loss cover for which no extra payments are made by the clients. In the case the employment agreement is dissolved by employer the insurance-related benefits will be paid every month to the clients until they find a new job. The benefits may be paid for the period of up to half a year. Benefit amount depends on the amounts transferred to the account in a month and on the type of account.
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Mondial Assistance and Neckermann - AllRisk
The product is complementary to the complex or family variant of travel insurance which is available at Neckermann offices or on its web site. Within the scope of this product insurer takes over the risk of a tourist event cancellation or an earlier return therefrom. The product contains no exclusions, i.e. it is sufficient to present an appropriate evidence to have the costs reimbursed. Medical documentation, police report or a personnel dept. certificate are a sufficient basis for the benefit from the policy to be paid.
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Deutsche Bank PBC i Europa Życie - db Gwarancja - Multistrategia
The product offers the possibility to gain profits on the basis of 4 investment strategies of optimum choice made on the markets of currencies, raw materials, shares and interest rates, regardless of the current situation. In each of the above mentioned areas transactions are concluded aimed at maximizing the profit by taking advantage of differences in rates of particular financial instruments.
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APPOINTMENTS
Financial Supervision Authority gave its unanimous consent for Tomasz Telejko to be appointed a board member of Benefia.
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CEA
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CEA SPEAKS AT EC HEARING ON SUPERVISION
The CEA spoke at a high-level European Commission hearing on supervision on 7 May on the recommendations contained in the De Larosière report. The discussion focussed on the appropriate interaction between macro- and micro-prudential supervision and the coordination between the proposed European System of Financial Supervision (ESFS) and the European Systemic Risk Council (ESRC), in particular whether supervisors should be full members of the ESRC and the appropriate representation of the Level 3 committees on the ESRC. The EC appears unclear on the detail on these highly political issues. The CEA stressed that the insurance sector is not a driver of systemic risk, and strongly argued against merging banking and insurance structures. It also called for appropriate insurance representation on the ESRC to ensure the relevant level of expertise and to avoid potential overlaps in reporting requirements. The Commission hopes to publish its supervisory architecture package on 27 May.
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CEA PARTICIPATES IN EC ROUNDTABLE ON IGS DESIGN OPTIONS
The CEA participated in a European Commission roundtable on insurance guarantee schemes (IGS) on 8 May. Its purpose was to help the Commission to gather input from key European stakeholders on the most desirable IGS design options should there be a legislative proposal in this area. The CEA, as well as the European representative bodies of insurance supervisors (Ceiops), consumers (Fin-use), mutuals (Amice) and pension funds (EFRP), were asked to comment on the various IGS roles, the different approaches to an EU-wide solution on IGS, the policies to be covered, the geographic scope, the degree of harmonisation and the coverage of the pensions sector. The Commission clearly favoured the option of insurance guarantee schemes as a last-resort protection mechanism to be introduced in all national markets based on the home-state principle and covering both life and non-life business, but with all the other aspects, including funding, to be left to the discretion of the member states. The European Commission has scheduled another roundtable for 11 June in which the CEA will also participate. The input gathered at both roundtables will be used by the Commission to draft its White Paper on IGS and the accompanying impact assessment, which are both likely to be published this autumn. The CEA will continue to fine-tune its position on IGS design options.
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EU COUNCIL AGREES DIRECTIVE BUT FORMAL APPROVAL STILL PENDING
On 5 May, the EU’s Economic and Financial Affairs (Ecofin) Council said that it had agreed the Solvency II Framework Directive. However, formal adoption will not take place until the text has been translated and verified by the legal jurists and is therefore not likely before September. The CEA understands that the formal approval is simply a technicality.
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MEETING ON LIABILITY AND INSURANCE REGIMES IN CONSTRUCTION SECTOR
The European Commission’s monitoring and steering group on liability and insurance regimes in the construction sector held a second meeting on 5 May to discuss its ongoing feasibility study. The study, known as the ELIOS project, is examining national schemes and guidelines to stimulate innovation and sustainability in the European construction sector. A progress report produced by the consultants carrying out the study has already concluded that harmonisation of construction liability and insurance schemes is not possible at European level and the consultants are proposing a charter in which the insurance sector would agree to promote innovation and sustainability in construction. The charter would also create two bodies: a technical body for the distribution of relevant information and a cooperation committee to facilitate implementation of the charter. At the meeting, the CEA expressed its doubts about the proposed charter, which was welcomed by the construction sector. The Commission said that it would perform a cost-benefit analysis of the proposed charter, and the CEA will continue to contribute to the debate. The group will hold its next meeting in November.
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WORLD
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HIGHER MUNICH RE GROSS WRITTEN PREMIUM
The total gross premium written of Munich Re group for the first quarter of 2009 increased by 5 per cent up to the level of 10.4 billion EUR. The company has reported a profit of 420 million EUR. Technical profit for the whole group amounted to 746 million EUR. Munich Re is operating mostly within reinsurance segment. However, the company is also present in direct insurance sector. Technical profit of 851 million EUR has been reported in the field reinsurance (increase by 1 per cent). Gross premium written has increased by 6.5 per cent. It amounted to 5.9 billion EUR for the end of March 2009. Direct insurance line generated 5 billion EUR of premium for the group. It means an increase by 3 per cent as compared to the data of the preceding year. Joerg Schneider, finance director of Munich Re has found the results to be very good in view of the current economic circumstances. He has also stressed a very good capital standing of the company.
Munich Re is the second reinsurer in the world in terms of size. The group is operating within direct insurance sector under Ergo brand.
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THE LARGEST REINSURER WITH A PROFIT
Swiss Re earned 150 million CHF during the first quarter of 2009. Gross premium written increased by 1 per cent up to the level of 6.5 billion CHF. Stefan Lippe, Swiss Re, board president, is satisfied with the profit which has been worked out. All the more so that such a result was reached under the difficult economic circumstances. Good results have also been shown by property line which reached gross premium written amounting to 3.9 billion CHF, i.e. 5 per cent more than a year before. The combined ratio amounted to 90.2 per cent whereby it was 96.4 per cent a year before. Life and health insurance derived premium reached the level of 2.6 billion CHF.
Swiss Re is the largest reinsurer in the world. The company provides full range of services related to the traditional reinsurance.
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HANNOVER RE: 43 PER CENT OF PROFIT INCREASE
Net profit of Hannover Re for the first quarter of 2009 increased by 43 per cent, up to the level of 216 million EUR. The amount of gross premium written has also increased. The increase was by 17 per cent up to the amount of 2.7 billion EUR. Takeover of ING US life reinsurance portfolio has also been one of the reasons of such an improvement of results.
Wilhelm Zeller, Hannover Re president, stated, when presenting the financial results of the reinsurer after the first three months of 2009, that the company has left the consequences of financial crisis behind. It is also on the right way to reach the assumed target, i.e. ROE (Return on Equity) ratio at the level of at least 18 per cent, by the end of 2009.
Hannover Re is one of the largest reinsurers in the world. The company belongs to Talanx group which is present on the Polish market through HDI-Gerling companies.
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STRONG FINANCIAL STANDING OF RSA
Net premium written of RSA amounting to 1.9 billion GBP has been reported for the first quarter of 2009. It means an increase by 8 per cent as compared to the data of the preceding year. In respect of the domestic British market the value of the collected premium was 652 million GBP. An increase at the level of 20 per cent has been reported in respect of the developing countries, i.e. up to 195 million GBP. The increase on other markets amounted to 12 per cent and reached the level of 1 billion GBP. Andy Haste, RSA president, stated the financial position of the company to be strong. That is why good results can be expected by the end of 2009.
RSA is a British insurance group. It is an Intouch Insurance Group shareholder, to which belongs, among others, Link4 company operating on the Polish market.
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VADEMECUM
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INSURANCE IN FIGURES
5,2 BILLION PLN - is the amount of autcasco gross premium written collected by insurers in 2008.
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QUOTATION OF THE WEEK
 PIU has endeavored for several weeks after Traffic Law amendment to be shaped in such a way that the vehicle whose driver fails to present an MTPL insurance certificate is excluded from traffic by the Police - Jan Grzegorz Prądzyński, vice president of Polish Chamber of Insurance.
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VOCABULARY
PML (Probable Maximum Loss) - the maximum probable loss which can occur assuming the installed safeguarding system (firewalls, safety shower, time of fire-brigade response) to be functioning normally; this value is used by the so called large risk insurers for risk exposure assessment.
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EXECUTIVE EDITOR
MARCIN TARCZYŃSKI m.tarczynski@piu.org.pl
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