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Poles Received Nearly PLN 12 Billion in Insurance Compensation and Benefits in Q1 2024

FINANCEPoles Received Nearly PLN 12 Billion in Insurance Compensation and Benefits in Q1 2024

In the first quarter of 2024, Poles received nearly PLN 12 billion in compensation and insurance benefits, which is 6.3% more than in the same period of 2023, according to data from the Polish Insurance Association (PIU). The number of insured Poles is steadily increasing.

Key figures:

  • PLN 11.9 billion for the injured, including:
    • PLN 4.2 billion from life insurance
    • PLN 5.1 billion from motor insurance (OC+AC)
    • PLN 2.6 billion from other insurances
  • Poles spent PLN 21.9 billion on insurance (gross written premium), which is 9.1% more than the previous year.
  • Insurance companies invested PLN 100.6 billion in bonds and other fixed-income securities, supporting the economy and public finances.
  • Over PLN 18.2 billion in assets were invested in WSE stocks and other variable-income securities.
  • Insurance companies paid over PLN 450 million in income tax.

Life Insurance

In the first quarter of 2024, 23 million Poles had life insurance, including 11.9 million under group insurance policies, a number comparable to the previous year. The total life insurance premium amounted to PLN 5.9 billion, an increase of 6.0% year-on-year. Payouts reflect the current situation related to the mortality of Poles.

Poles are spending more on life insurance. Interest in protective and accident products is systematically growing. This is good because we should think of life insurance as a financial cushion in case of our death or serious illness. Especially since it is difficult for a family to survive on one salary in such a situation. Poles lack savings and are heavily indebted – says Jan Grzegorz Prądzyński, President of the PIU Management Board. – At the same time, the share of savings and investment products is declining. This is a bad trend, especially considering demographic changes. Insurance is a long-term savings instrument, especially for people with low and medium incomes. They can effectively build a financial cushion for old age – he adds.

The replacement rate in 2022 was 56.6%. Translating this to average earnings, we will receive half of our salary in retirement. This is not enough to live with dignity and finance, among other things, the increasing health needs associated with age. This problem is highlighted by the PIU in its latest report “Poles and Risk – How We Insure. The Insurance Gap in Poland.” Based on ZUS data, PIU found that in retirement, we will spend only half of our time in good health.

PIU’s analysis also shows, among other things, what the sum insured in life insurance should be. It cannot be lower than the amount of liabilities left behind and should also help maintain the family for several months to even several years, depending on the earning capacity of the household’s primary breadwinner. In the event of a serious illness, the benefit amount should cover additional treatment, rehabilitation, or job change costs. Assuming average Polish earnings, debts, and savings, the average sum insured in the event of death should be about PLN 330,000.

Building family resilience in case of death or serious illness and long-term saving is crucial. Let’s not forget that life insurance is also a source of long-term capital, more resistant to all kinds of crises and economic cycles compared to bank capital. That is why in Western Europe, good conditions for the development of insurance have been created, so that the capital invested in these products is an anchor for the economy. Thus, reducing the gap in this area not only strengthens Polish families financially but also brings real benefits to the economy. We would like tax incentives for life insurance to apply in Poland as they do in Western European countries. An employer could include the paid group policy for an employee in deductible expenses and thus lower their tax. The employee could be exempted from income tax on the financial benefit they have due to group insurance – says Jan Grzegorz Prądzyński.

Motor Insurance

In property insurance, motor insurance accounts for the largest part of compensation. Compensation and benefits from mandatory motor third-party liability (OC) insurance amounted to PLN 3.03 billion in Q1 2024, an increase of 13.2% compared to the same period last year. Despite the rising costs of claims, the average premium for motor third-party liability insurance increased by only 3.7% and amounted to PLN 527. The average claim from motor third-party liability insurance increased by 12.7% compared to last year and amounts to PLN 9,960 after the first quarter of this year.

We expect adjustments in motor insurance. Inflation, rising claims settlement costs, including medical procedures, must be reflected in premiums, which insurers are obliged to do by regulations and supervision. We expect motor insurance prices to rise faster in 2024 – says Jan Grzegorz Prądzyński.

Autocasco compensation amounted to PLN 2.1 billion, an increase of 19.8% compared to the same period in 2023.

Other Property Insurance

After the first quarter of 2024, compensation related to natural disasters and other property damages amounted to PLN 0.9 billion, only 1% more than last year. The first quarter of this year was relatively calm.

A calm first quarter of the year should not lull us into a false sense of security. Already in April and May, we received over 20,000 damage claims related to a frost wave. Climate risk constantly accompanies us with varying intensity. We have an average of 49% of insured properties. However, many of them are underinsured. Market estimates show that this applies to even 3 out of 10 properties. Underinsurance is up to several dozen percent. Given the changing climate, insurance is the only form of ensuring some compensation for the losses we may suffer due to extreme weather – says Andrzej Maciążek, Vice President of the PIU Management Board.

Profits in 2023

In Q1 2024, insurers paid over PLN 450 million in income tax to the state budget. They generated nearly PLN 1.7 billion in net profit during this period.

Examples of insurance claims in Q1 2024

Policy Type Premium Event Assistance for the Injured
Accident Insurance PLN 25.90 (annually) A 4-year-old child, while getting out of a car, fell and broke the tibia of the left leg Benefit paid: PLN 600
OC PLN 767.85 (annually) A delivery vehicle drove onto a railway crossing without giving way to a train Compensation paid: PLN 199,752
AC PLN 1,079.54 (annually) A car was stolen from a private property parking lot Compensation paid: PLN 159,000
MINI FLEET PLN 6,701.28 (annually) The driver fell asleep at the wheel and drove to the other side of the road, hitting a bus head-on Compensation paid: PLN 111,500
Private Liability Insurance PLN 52 (annually) The insured’s dog ran under a car, damaging the bumper and engine cover Compensation paid: PLN 37,047.51
Private Liability Insurance PLN 55 (annually) The insured, while riding a bicycle, hit a car, damaging its left side, including the front and rear doors Compensation paid: PLN 5,994.68
Private Liability Insurance</ td> PLN 52 (annually) Due to a failure in the insured premises, the apartment below was flooded Compensation paid: PLN 4,004.58
Home Insurance PLN 230.68 (annually) A house fire caused by chimney soot ignition Compensation paid: PLN 117,666.69
Home Insurance PLN 312.08 (annually) An electric heater short-circuited, causing a fire in the apartment Compensation paid: PLN 53,610.51
Home Insurance PLN 771.24 (annually) During the homeowners’ absence, a burglary occurred. Almost all alarm devices were torn from the walls Compensation paid: PLN 52,184.89
Business Insurance PLN 1,318.06 (annually) During an attempt to clean company equipment, it fell and the laser head was damaged Compensation paid: PLN 38,683.50
Business Insurance PLN 100 (annually) Heavy rains and wind damaged the roof, causing the office (real estate agency) to be flooded Compensation paid: PLN 4,802.35
Business Insurance PLN 3,920 (annually) Heavy rain flooded the sports club premises: 3 rooms, corridor, vestibule Compensation paid: PLN 15,536.44
Individual Life Insurance PLN 80 (monthly) Death of the insured in a car accident Benefit paid: PLN 110,000
Individual Life Insurance PLN 85 (monthly) Death of the insured due to a brain stroke Benefit paid: PLN 35,000
Group Life Insurance PLN 90 (monthly) Fall from a ladder Benefit paid for total disability: PLN 200,000
Group Life Insurance PLN 50 (monthly) Diagnosis of breast cancer in the insured Benefit paid: PLN 70,000
Group Life Insurance PLN 60 (monthly) An insured person was hit by a firework Compensation for disability: PLN 12,000

 

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