Europe and North America are traditionally the two largest insurance markets in the world, although the greatest potential for growth is in the Asian markets. The financial crisis has had an impact on the business of insurers worldwide.



Insurance premium collected in various parts of the world (trillion dollars).

Comparison of the EU countries with the leading insurance market – the U.S. – emphasises the growth potential of the European insurance sector. Obviously, there are significant differences between various insurance markets in the European Union itself. In some countries, insurance penetration is comparable to the values noted in this respect in the U.S., while other countries show a very low value of this indicator. The highest level of insurance penetration (share of premiums in GDP) can be observed in Luxembourg, Great Britain, Holland and Belgium. Differentiation occurs both among the old fifteen EU countries, and the new EU countries.

The history of insurance in the world

Already in ancient times there were known cases of associations of  interested parties in order to share risk. A characteristic feature of these different forms of associations and unions was basing on the principles of reciprocity and solidarity. Community risk arose earliest in those fields, where cargo and money were of greatest importance, yet also where the danger threatening economic activities and a man’s life was the greatest. These areas included trade, transport and crafts.

Already at the time of Hammurabi (about 2 thousand BC) there were known examples to contract of caravan participants in the Middle East. They committed themselves to jointly cover any damages incurred by each participant of such an agreement. The subject of the contracts was primarily damages done to pack animals. If one of the participants of the contract had lost a pack animal, the other members submitted an appropriate amount, which was to compensate for this loss.

More information can be find in the attached elaboration.

The history of insurance in Poland

First ideas of insurance appeared in Poland in the 16th and 17th century. In some cities there were so-called “fire orders” (fire precautions registers), which were based on an organized neighbour support. There were also fire unions established, which could be described as the first mutual insurance companies. The first fire unions were established in the first half of the 17th century and were quasi-insurance institutions based on insurance premiums paid in advance. Their purpose was to help people who suffered loss due to fire. The most popular unions were in Poznań, Leszno, Wschowa and Wronki. The first insurance companies on the Polish land were established during the partitions of Poland, at the turn of the 16th and 17th century, mainly under Prussian occupation.

Fryderyk Wilhelm’s decree from 21st April 1803 established the Fire Society for the Cities in South Prussia. The decree from 9th April 1804 established the Rural Fire Society of South Prussia Province. Both  of these insurance institutions, which covered native Polish lands, were a base of further insurance organizations in the Kingdom of Poland and Grand Duchy of Poznań. Historically speaking, they were the first public insurance companies to act on Polish lands.

At the end of 2003 and the beginning of 2004 it was a 200th anniversary of insurance in Poland.

More information can be find in the attached elaboration.

Business (commercial) insurance are divided into two basic sections:

life insurance (branch I)

other personal insurances and non-life insurances (branch II)

Within both sections there are several (in case of branch I) and dozen or so (in case of branch II) groups of insurance.

For example, the insurance policies related to capital funds is a group of life insurance section. Casco insurance of land vehicles  is a group of branch II.

According to Polish law, one and the same insurer cannot offer its clients both non-life and life insurance.

Life insurance includes products which are supposed to provide, above all, benefits to the family and dependants of the insured in case of his or her death.

The importance of life insurance has grown tremendously over the recent years. The functions of such products have also expanded. In addition to their protective nature, life insurance policies can also be used as a savings (investment) product today. A major role of life insurance plans is also to provide the insured with money to buy additional pension benefits.

Life insurance products can be divided into two main categories:

1. Protection Policies

These are classic life insurance products. Once the insured passes away, insurance coverage ensures that his or her family is not left without financial support.

2. Savings (Investment) Policies

With this type of insurance you can increase your capital for future pension funding. Your contributions are invested on the market, mostly via capital insurance funds (such policies are called unit-linked insurance plans). The increased capital can then be used, for example, for additional retirement income. Of course, investment policies give protection too, that is, each of them provides money to the family of the insured in case of his or her death.

Non-life Insurance includes products which, on the one hand, protect you against costs associated with the damage or loss of non-life, but on the other hand secure the interests of persons who may suffer damage as a result of an accident.

There are many types of non-life insurance policies, but three main types can be distinguished:

1. Accident and Sickness Insurance

It covers the risk of an accident, including that of an accident at work and occupational disease. Depending on the type of coverage, the insured is eligible to a one-off or regular benefits.      
2. Liability Insurance

This insurance applies where the insured causes damage to another person and is obliged to redress it. With the liability insurance policy in place, it is the insurance company which pays compensation to the injured rather than the perpetrator. The interests of both the injured and the policy holder are thus protected.

3. Non-life Insurance

This type of coverage protects against the financial consequences of damage to or loss of non-life in case of flat fire, car theft, etc. Such products can be taken out to protect non-life against damage caused by calamities or disasters. Buildings, civil structures, machinery, equipment, motor vehicles and electronics can be insured in this way.

Risk accompanies you at all times and is associated with whatever you do. Two types of risk can be distinguished: a speculative and a pure one. The first one is a result of what you do in the hope of making gains, although you can sustain losses as well (e.g. when buying shares on the stock exchange). In these situations you are more or less aware of taking such risk. 
There are also events that occur beyond your control or intention, which can result in losses only (e.g. car accident, fire); the risk is pure then. Not always can your personal efforts reduce such risk (e.g. careful driving, fire-fighting equipment in operational condition), and many times its consequences exceed existing savings. This is why the coverage offered by insurers is often used to ward off pure risks.

Insurance products are based on the mechanism of risk distribution and relate to events that may happen in the future. From the point of view of an individual, future is hardly predictable. It is hard to know whether next year your house will be on fire. What an individual may find difficult to foresee can be predicted quite accurately for a larger community, however, that is, e.g. how many houses will burn in Poland annually.

With such knowledge available, you can predict how much money may be needed in case of these adverse occurrences happening. If this money is distributed among all (or a large proportion of) community members, then the burden will be relatively small as compared to potential losses an individual may experience, and one can be sure that none of the community members suffers financially (except for the cost of a premium) in case of a house fire. Such a community is called a risk community, and the above way in which negative consequences are financed – insurance.

It should be noted and stressed that the insurance premium depends on the risk, and the risk depends on the probability and amount of a potential loss. The insured who is able to reduce the probability or amount of losses can expect a lower premium. This relationship also causes that the higher the insurance sum, the higher the risk, and consequently the premium. Premium individualisation prevents anti-selection, which can occur with averaged premiums. Anti-selection exists when individuals with risk lower than average resign from coverage because they find it not worth paying for, whereas those whose risk is higher stay insured. This causes that the incidence of losses becomes higher for a risk community than for the whole population and the premium has to be increased. Even with a premium increased, it can still turn out that individuals with risk lower than average resign from coverage because they find it not worth paying for, whereas those whose risk is higher stay insured.

The premium is largely dependent on the degree and nature of risk to be insured. However, the existing incidence and extent of losses are not the only criteria for calculating the premium amount. Risk features that can affect the accuracy of how potential insurance benefits are assessed may be equally important. The insurance company runs a risk that the actual loss ratio, a relation of benefit payments to premiums received, will be higher than assumed at the time of determining the amount of insurance premiums. It is important, therefore, to make risk predictable, so that an insurance company could assess the incidence and extent of losses quite accurately using historical data.

With the insurance model, you can distribute the consequences of a certain risk across all population. General access to insurance products is one of the social and economic development indicators. It is a myth that insurance is useful only for the rich and only the rich should be interested in it. Research shows that none but low and moderate income earners can reap maximum benefits from being insured.
Insurance is a major financial asset for both individual households and the whole economy. Life products increase savings, especially long-term ones.

The purpose of such savings can be multiple. The most important aims include educational needs of children and old age protection. With level of social security and healthcare benefits  becoming lower, the significance of insurance products will be growing.

Insurance also serves as ‘a macroeconomic stabiliser’, as it helps mitigate risk-induced shocks and as such promote GNP growth. The insurance industry is also a major employer. Thirty-three national insurance associations which are CEA (European Insurance and Reinsurance Federation) members employ nearly one million people. In Poland, more than 30,000 people work directly for insurance companies, and the total employment of the insurance industry is estimated at more than 100,000.

Why is insurance so important to the economy?

Insurance is an important financial element of both individual housholds and the economy as a whole. Life products help to increase savings, especially the long-term ones. The objective of such savings can be varied, the most important being the educational needs of children and security in the old age. The importance of insurance will increase with a reduction of the scope and level of benefits from the social security and health system.

Insurance policies function as a macro-economic “economy stabilizer.” Indeed, they soften the shocksassociated with risks as well as they contribute to GDP growth. The insurance industry is also an important employer. It employs nearly a million people out of 33 domestic insurers associated in CEA. CEA is the European federation of associations of insurers and reinsurers.

In Poland, there are about 80 insurance companies and several branches of foreign companies. More than 500 insurance companies operate on the basis of the so-called notification, in accordance with the principle of a single European passport. However, no Polish institution keeps statistics concerning the achievements of notified companies. Notified companies are required to prepare reports on their operations, but they submit these reports to their home supervision authorities.


Before making any decision concerning any insurance, first of all we have to ask ourselves what and against what risks we want to protect. Only a precise definition of our own needs will give us a guarantee that we will pay for what we really need. If we decide on the insurance, it is always good to compare offers of several companies. It is not just about checking prices – remember that price is not the only important thing  – but above all about the scope of protection. When we decide what policy we need, we have to read the contract carefully before signing it.

It must also be noted that there are uncommon terms and words in insurance contracts that may sound unfamiliar to customers. That is why on our website you will find definitions of insurance terms as well as instructions on how to read the individual insurance contract. Here you can also learn what are the risks against which an insurance policy may protect, what is the insurance sum, what is the exclusion and what is and what is not the insurer’s liability. You will also learn how and what type of documents to provide to the insurance company, so that you do not have to wait in order to receive compensation or benefit.