Poland insurance sector: Covering all bases

The focus on additional pension savings and the problems with access to public healthcare boost pension and health insurances, while growing affluence of Poles could spark more interest in life and automotive insurance in the longer term.

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Sector Overview

The Polish insurance market was ranked 12th in the European Union in 2014, according to that year’s gross written premium (GWP). This indicator has been declining since 2012, alongside the sector's share in Poland's GDP – which dropped from 3.8% in 2012 to 3.1% in 2015. However, the sector remains important for the economy, both as a provider of jobs (it employs more than 250,000 persons) and as a substantial investor in both treasury instruments and private companies, with assets totaling PLN 180bn. The industry is almost equally divided into life and non-life insurance segments. In the latter, more than half of premium revenue comes from automotive insurance, which has been a drag on the sector's financial results.

Entry Modes

The Polish insurance market is highly concentrated, with the top five insurers in life and non-life insurance segments accounting for around 57% and 70% of their total premiums, respectively. The biggest player in both segments is the country's incumbent, PZU. Newcomers are still popping up, albeit in small numbers (one or two insurers per year), but the bigger players are already seeking expansion, mainly through acquisition, which is best exemplified by PZU's actions: it has purchased insurers both domestically and in other CEE countries and has recently started building up its banking arm.

Segment Opportunities

Even though profitability in the sector is only moderate and market players are cautious about expecting an overall improvement, there are niches and product groups that bode well for growth. The focus on additional pension savings means that there is a chance to increase sales of adequate longterm policies, or raise premiums for existing ones, or sell more group policies. As for niche segments, continuous problems with access to public healthcare means that there are chances to increase sales of health insurance. The growing affluence of the Polish society could spark more interest in both life and automotive insurance in the longer term.

Government Policy

The insurance sector is quite heavily regulated: even though it is fairly easy to start a business in the branch, the Polish Financial Supervision Authority (KNF) issues recommendations that dictate how insurers in particular segments ought to behave, which in some cases has led to changes affecting entire product groups. Inevitably, the industry is also impacted by changes in overall government policy – recently it has been subjected to a new tax on financial institutions' assets. On the other hand, it may benefit from the government's fiscal easing, aimed at further boosting individual consumption.

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