Insurers paid out more than PLN 10 billion worth of insurance compensation

Date: 17 June 2021

In Q1 2021, Poles received PLN 10.2 billion worth of insurance compensation and benefits, according to Polish Chamber of Insurance (PIU) data. Payments from life protection insurance increased the most. This is a result of higher mortality due to the pandemic.

KEY FIGURES:

  • PLN 10.2 billion for injured persons, including:
    • PLN 4.8 billion from life insurance (including 28% higher payments from protection insurance).
    • PLN 3.8 billion from motor insurance (third-party liability insurance + motor hull insurance)
    • About PLN 1.6 billion from other insurance.
  • We spent PLN 17.6 billion on insurance, which is 5.3% more than the previous year.
  • Insurers invested nearly PLN 88 billion worth of assets in domestic bonds and other fixed-income securities supporting the economy and public finance.
  • Almost PLN 17.8 billion worth of assets were invested in shares of WSE companies and other variable-income securities.

LIFE INSURANCE

In the life market, an increase in benefits from protection insurance is mainly visible.
– ‘The data reflect the tragic consequences of the pandemic. Higher mortality was already observed from November 2020, while in Q1 2021, it also affected younger age groups’, says Jan Grzegorz Prądzyński, President of the Management Board of PIU.

In addition to the increase in benefits, premiums are also rising in life insurance, which indicates increased interest in these products. The protection insurance premium amounted to PLN 2.2 billion, which is 8.6% more than in the previous year. Sales growth can also be seen in
accident and sickness insurance. Savings and investment policies were also more popular. Poles spent PLN 1.6 billion on them, which is 6% more than in the previous year.

PROPERTY INSURANCE

As far as property insurance is concerned, motor insurance accounts for the largest share of compensation payments. Their value remains at a level similar to the previous year’s figures:

  • Compensation and benefits from compulsory motor third-party liability insurance amounted to PLN 2.4 billion and were 5.4% lower than a year before.
  • Compensation from motor hull insurance amounted to PLN 1.4 billion, 2.4% less than a year before.

In Q1 2021, the average premium for compulsory motor third-party liability insurance was PLN 496, i.e. 11.6% less than a year before. At the same time, the average claim increased. Its cost amounted to PLN 8,035, 11.3% more than a year before. ‘Insurers should compete primarily in the field of quality of service, for example by participating in a direct claim adjustment system. If rate drops are excessive, this leads to what we experienced a few years ago – the price war in the third-party liability market ended in significant price increases, which aroused understandable public opposition. Reducing premiums while costs are increasing is only seemingly beneficial to drivers. In the long term, there is no positive effect either for the industry or for clients’, says Jan Grzegorz Prądzyński.

The first three months of this year did not bring major losses in terms of weather-related damage. Compensation related to natural elements and other property damage amounted to PLN 651 million, 1.5% less than a year before. ‘We are about to face the warmest months of the year, during which there is often an increase in adverse weather events. We are not able to avoid them, but we can protect ourselves against them financially thanks to insurance’, says Andrzej Maciążek, Vice-President of the Management Board of PIU.

EXAMPLES OF INSURANCE CLAIMS IN Q1 2021

  • Agro-casco: fire of agricultural machinery during standstill. According to the fire brigade, the fire was caused by a dangerous physical phenomenon that led to a short circuit in the electrical system. Then, the diesel tank was burnt through and the fuel ignited. Amount of compensation received by the injured person for the destroyed property: PLN 201,000. Annual insurance premium: PLN 3,100

  • Group life insurance: death of a man aged 46, due to hepatic cirrhosis. The deceased had been insured since 2019. He died in February 2021. Benefit for the beneficiary: PLN 575,000. Annual insurance premium: PLN 1,900.

  • Group sickness insurance: a 43-year-old woman was diagnosed with thyroid cancer. She had been insured since 2015. After the diagnosis, the insurer paid the benefit provided for in the contract in the event of cancer. Benefit for the sick woman: PLN 129,000. Annual insurance premium: PLN 1,200.

  • Third-party liability insurance for IT consultants: A ransomware incident occurred on an injured person’s servers. The servers were hosted by an insured company. The injured person lost access to data and the data had not been backed up correctly. The loss of data resulted from an error of an employee of the insured company. The injured man received PLN 200,000 from the hosting company’s third-party liability insurance policy. If the company hadn’t had the policy, it would have borne those costs out of its own pocket. The company paid PLN 18,500 per year for full insurance.

  • Motor hull insurance premium: While being driven, a car collided with a deer which ran into the road. Cost of repair of the car, borne by the insurer: PLN 8,670 Annual premium: PLN 823.

  • Accident insurance (purchased with a transport package): An insured person, while getting out of the car, caught a foot on the vehicle’s door sill. A medical examination revealed a broken ankle. Accident benefit plus reimbursement of medical expenses: PLN 1,090 Annual premium: PLN 79

STRONG CAPITAL POSITION OF INSURERS

In Q1 2021, Polish insurers earned net profit of PLN 1.1 billion, i.e. 7.6% more than a year before. Insurers paid PLN 333 million of income tax to the State budget.