Results of the insurance market after Q2 2013

Polish insurers paid 19.5bn worth of claims and benefits in H1 2013 to clients and the injured – by 2.2% more than last year.

Key figures:
• On the motor third party liability insurance market, the number of damage is still marked by a downward trend (decrease by 3.25%)
The value of the total third party liability insurance payments also decreases, but at a slower rate (-1.24%)
• The average compensation for motor third party liability insurance increased from PLN 5,160 to PLN 5,268
• The number of life insurance policies with the insurance equity fund increased by 5.37%
(to 2.88m)
• Compensations for damage caused by natural disasters increased by 22%, to PLN 608m

Motor insurance market

Key figures:
• Third party liability insurance – 504 thousand claims and benefits paid for the overall amount of PLN 2.66bn.
• Comprehensive insurance – 356 thousand claims paid for the overall amount of nearly PLN 1.73bn
• The gross written premium in third party liability insurance amounted to PLN 4.17bn (a drop by 5.13%)
• The gross written premium in comprehensive insurance amounted to PLN 2.7bn (a drop by 7.08%)

PIU Comment:
A tendency can be seen on the third party liability insurance market to an increasing average payment despite a decreasing number of damage occurrences. Consequently, the insurers’ burdens under the third party liability insurance remain on a similar level despite diminishing number of collisions and accidents reported. In comprehensive insurance, the number of the damage reported decreased, but the value of claims paid remains at a practically unchanged level.
The technical result on comprehensive insurance was PLN 210bn after Q2 2013 and it was approx. 36% lower than a year ago. One of the reasons may be the ageing car park (older cars = lower comprehensive insurance premium).
The technical result on third party liability insurance was PLN 81.8m, compared to PLN 7m a year ago. ‘We should remember that the positive technical result for third party liability insurance does not guarantee the positive result at the end of the year. We had a similar situation in 2012 for example. The reason is unpredictability of the personal damage’ says Jan Grzegorz Prądzyński, President of the Management Board of PIU.

Property insurance market (exclusive of motor insurances)

Key figures:
• The premium for property insurance (exclusive of motor insurances) amounted to over PLN 7bn and was by 11.4% higher than a year ago.
• The number of insurance policies against damage caused by natural disasters remains on the level similar to that of the previous year (7.84m) The level of compensations increased by 22% (to PLN 608m). It is mostly due to flooding of Q2 2013.
• The value of claims paid for financial insurance (guarantees, loans and the so-called different financial risks) increased significantly although its number visibly decreased. It means a high increase of the single claim value.

PIU Comment:
Despite damage caused by natural disasters, the market remains safe and stable. The technical result on insurance against natural disasters remains positive (PLN 55m), although it is of course lower than a year ago (by 64.5%). ‘This year’s natural disasters are observable, but they do not exceed the level of everyday activity of insurers. A much more important problem is that, despite the raising frequency of natural disasters in Poland, the number of the insured does not increase’, emphasises Jan Grzegorz Prądzyński.
The increase of the average compensation on the financial insurance market may be the proof of deteriorating financial condition of entities covered by such insurance. However, we should take into consideration that such type of insurance is characterised by high damage rate fluctuations and their portfolio is still not significant compared to the entire insurance market.

Life insurance market

Key figures:
• Claims and benefits from all life insurances amounted to PLN 12.9bn
(increase by 7.57%)
• Payments from unit-linked products increased by 22.6% and reached PLN 3.7bn

PIU Comment:
The premium on the life insurance market was PLN 16bn after Q2 2013, which marks a drop by 18.2%. It was affected by short-term life insurance policies, i.e. products combining the features of a life insurance policy and a bank deposit. For this group of products, the decrease in premiums was the highest. The value of payments made increased in comparison to last year. In total, out of more than two million payments made, the clients and eligible parties received PLN 12.9bn, over 7.5% more than a year ago. The value of claims and payments was mostly related to unit-linked insurance: the clients were paid PLN 3.72bn compared to PLN 3bn a year ago.

Net financial result
The net profit of life insurers for the first two quarters 2013 amounted to nearly PLN 1.4m and was over 18% lower than a year before. ‘It is due to the results on investing activity lower than last year’, explains Jan Grzegorz Prądzyński.
According to the financial statements data, property insurance companies closed the first half with PLN 5.22 billion profit. We should clearly state that this result is mainly related to the dividend policy of the largest Polish insurance group. The profit of the entire property insurance sector, excluding that factor, amounted to approx. PLN 1.4bn after H1 2013 and was over 11% better than a year ago. Both life insurers and property insurers reduced the costs of their business activity.

In the first half of 2013, Polish insurers paid PLN 585m of income tax.