General Insurance Article - Poland's insurance market on the rise


 Poland’s insurance market has overtaken that of Denmark, Norway and Ireland and is now Europe’s thirteenth largest, according to a new report from Timetric.

 Since 2008, the written premium of the Polish non-life insurance segment has been growing at an annual rate of 6.6% to reach PLN23.4 billion (US$7.2 billion) in 2012. According to a new report from Timetric, this trend is set to continue up to 2017, with written premiums in the Polish non-life segment estimated to reach PLN31.6 billion (US$10.7 billion). This will make Poland the eleventh largest market in Europe in 2017, overtaking countries such as Austria and Sweden. By 2017, Poland will also be the second largest after Russia in the Eastern European Group (EEG).

 Natural disasters drive premium growth in Polish non-life insurance

 The severe flooding and forest fires that affected Poland in 2010 have led both insurers and consumers to re-evaluate their stance on non-life insurance. The losses affected both consumer and insurer behaviour: Consumers have become more risk-averse and have been buying more coverage to protect themselves. On the other side of the table, non-life insurers have been forced to re-evaluate their pricing and product strategies. Many have also had to increase their premiums in order to repair their balance sheets following the floods.

 “Insurers have started focusing on profits and technical results, rather than on the volume of policies sold and their corresponding share of the Polish non-life market,says Timetric’s economist Carlos Pallordet.

 New infrastructure projects to increase written premiums

 Another key driver for growth in written premiums will be the country’s rising demand for commercial line products, with large infrastructure projects in the pipeline, including airports, roads and healthcare facilities. The IMF also predicts positive Polish GDP growth up to 2017, which will support the industrial output. According to the Polish Statistical Office, industrial output was up 2.2% year-on-year in August 2013. In turn, this higher output will increase sales of non-life products such as industrial property and engineering insurance.

 The Polish non-life segment is dominated by motor insurance, which accounted for 62.2% of non-life gross written premiums. Motor third-party liability insurance, which is compulsory in Poland, grew at an annual growth rate of 15.2% since 2008. Agencies remain the preferred distribution channel, accounting for 62% of total non-life market commissions in 2012. Although the e-commerce, convenience store and multilevel marketing distribution channels currently only account for a small share of new written premiums, they registered significant growth since 2008. This is a consequence of Polish consumers’ increasing tendency to purchase insurance products online.

 Although the country represents a sizeable market – one of the 25 largest in the world - prospective entrants will have to perform strongly to gain a foothold.

 “As a member of the European Union, Poland’s non-life insurance market has no barriers to entry for companies from other member states, and rivalry is intense as a result,” says Pallordet.

 “The segment is highly concentrated, with the leading 10 non-life insurance companies accounting for 84.4% of written premiums in 2012.”

 ”Market concentration in Poland is expected to increase even further with the implementation of Solvency II, with the new minimum capital requirements likely to drive out some of the 33 companies currently licensed to conduct non-life insurance business in the country.”
  

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