PIU presents data on insurance market after the 1st half of 2010

In the first half of 2010 insurance companies paid over PLN 850 million worth of claims for losses caused by fire and other natural disasters. It is 90% more than a year ago. These are mainly claims associated with the floods which occurred in Poland in the second quarter of this year. Data gathered by the Polish Insurance Association, covering approx. 99% of the Polish insurance sector, show that overall in the 1st half of this year customers of insurance companies received over PLN 19.3 billion in the form of claims and benefits. This is 7% less than a year ago. As for non-life insurance nearly PLN 6.7 billion were paid (increase by 14.1%) whereas in regard to life insurance, over PLN 12.6 billion were paid (drop by 15.5%).

On the non-life market we are observing a further deterioration of the technical balance, i.e. result on basic activity. This is an effect of the flood (2nd quarter) as well as a long and cold winter (1st quarter).


Non-life market

In the 1st half of this year the insurers collected PLN 11.2 billion worth of premiums, i.e. 4.2% more than a year ago. Over 54% of the premiums on the non-life market come from motor insurance. Premium earned on MTPL as well as accident and theft insurance increased from year to year by approx. 2%, whereas the value of claims in these groups increased by 5.6% (MTPL) and by 7.3% (accident and theft insurance). On the Polish motor insurance market we may still observe faster growth of the value of claims paid than premium collected. This is an effect of huge competition (including price competition) between the insurers.

The value of claims and benefits paid in the 1st half of 2010 should be looked at, above all, from the point of view of the flood. – This was the largest claim adjustment operation in the history of the Polish insurance market. During the flood the insurers provided assistance to over 200 thousand people and approx. 1.5 thousand companies. All parties affected by the disaster could count on simplified procedures and special claim adjustment paths – says Jan Grzegorz Prądzyński, president of the management board of the Polish Insurance Association. It should be noted that not all claims associated with the natural disasters are reflected in the insurers’ results for the 1st quarter of this year. The floods in Bogatynia and Zgorzelec occurred more than a month after the 2nd quarter had been closed, that is why the effects of the flood claims will be visible also in the insurers’ reports for the 3nd quarter of 2010.

The technical loss of the non-life insurers after the 1st half of 2010 was PLN 777 million in comparison to PLN 238 million of technical profit the year before. – The flood had to be reflected in this year’s results. Please note though that insurance activity is a long-term business. The insurers fulfil all cautionary standards stipulated by the Polish law, and thanks to the reinsurance mechanism, they are financially prepared for paying flood claims. Thanks to this the security of the customers and the funds entrusted by them in the long run are not threatened – emphasizes Jan Grzegorz Prądzyński.

The net profit of non-life insurers after the 1st half of the year amounted to PLN 3.1 billion and was 26% higher than a year ago. But it must be mentioned, that if the insurance group is constructed in such a way that the non-life company is the owner of a life company, then the profit of the life company transferred over to the owner in the form of a dividend is added in the financial statement to the financial result of the owner. If we do not take the biggest one dividend into account in the results for the 1st half of 2010 and the 1st half of 2009, the net loss of the non-life sector in the 1st half of this year amounted to PLN 11 million in comparison to a PLN 884 million profit the year before.

Life market

Life insurers paid in the 1st half of 2010 PLN 12.7 billion worth of benefits, i.e. 15.5% less than a year ago. This drop is associated with a smaller desire of the customers to resign from investment products than a year ago. This applies to short-term bank products (the drop in the value of benefits in group 1 amounted to 18.7%) as well as to products linked to capital funds (the drop in the value of benefits in group 3 amounted to 8%). The premium collected by life insurers in the 1st half of 2010 amounted to PLN 15.1 billion and was 8.4% higher than a year ago. The highest growth in the premium written pertained to products linked to insurance capital funds – 27.3%. The balance on technical life account after the 1st half of the year amounted to PLN 1.8 billion and was 38% higher than a year ago. The net financial result amounted to PLN 1.9 billion in comparison to PLN 2.3 billion the year before.