Implementation issues relating to the life insurance acquis

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Implementation issues relating to the life
insurance acquis

• Marcin Kawinski
• The Insurance Ombudsman Office Poland

Workshop on EU Insurance legislation (INT MARKT
11718) Istanbul, 23-24 June 2005
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The Insurance Ombudsman Office

• Founded to protect the interests of the weakest
  market participants - insurance consumers,
  vis-a-vis Insurance Companies equipped with much
  greater resources and qualified staff
• The Insurance Ombudsman takes part in the
  meetings of The Insurance and Pension Funds
  Supervisory Commission

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The Insurance Ombudsmans statutory tasks

• The Insurance Ombudsman was founded
• to represent and protect consumer interests of
  the insured and beneficiaries under insurance
  contracts
• to advise the supervisory body of any
  irregularities found in the operation of
  insurers, pension funds and vocational pension
  plans
• to initiate and engage in educational and
  information activities in the scope of insurance,
  pension funds and vocational pension plans.

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The process of implementation

• How exact?
• Implementation ? translation
• Implementation ? variation
• How fast?
• Where is the market?
• Waiting for the market
• Directives for market not market for directives

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Legislation common problems in the new Member
States

• Full participation in the green card system for
  third party liability insurance
• Further transposition/fine-tuning needed
• prudential standard not aligned to acquis and
  international standards
• minimum solvency and guarantee fund
• administrative and legal restrictions the freedom
  to provide the right of establishment and service
• out-of-court redress schemes

There is always something to implement.
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Road to accession

• Act of 28 July 1990 on Insurance Activity
• Basic act for a new insurance market
• Simulation plan minimal guarantee fund,
  solvency margin and own funds.
• Generally consistent with present EU directives

1990
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Road to accession

• Amendment of Act of 28 July 1990 on Insurance
  Activity
• More precise and higher criteria for new
  insurance company.
• Implementation of security norms (one risk lt 25
  of the fund)
• Foundation of supervisory office
• Regulation of insurance intermediaries
• Foundation of The Insurance Guarantee Fund
• New bankruptcy regulation
• Foundation of Insurance Ombudsman
• Foundation of actuary

1990
1995
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Road to accession

• Amendment of Act of 28 July 1990 on Insurance
  Activity
• Regulations for branch of foreign insurance
  company
• Obligation
• Principle of mutuality
• New definitions some of security norms

1990
1995
1998
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Road to accession

• Amendment of Act of 28 July 1990 on Insurance
  Activity
• Regulations on trade of insurance company shares
• Regulations for branch of foreign insurance
  company
• Modification of investment limits for an
  insurance fund

1990
1995
1998
2000
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Missing elements

• full freedom of cross-border services
• single license
• supplementary supervision of insurance
  undertakings in insurance group
• insurance intermediares
• third party liability insurance

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Road to accession

• Act of 22 May 2003 on Insurance Activity
  (Official Journal No 124, Item 1151, as amended)
• Act of 22 May 2003 on Compulsory Insurance,
  Insurance Guarantee Fund and Polish Motor
  Insurance Bureau (Official Journal No 124, Item
  1152, as amended)
• Act of 22 May 2003 on Insurance Mediation
  (Official Journal No 124, Item 1154, as amended)
• Act of 22 May 2003 on Insurance and Pension
  Supervision and The Ombudsman for the Insureds
  (Official Journal No 124, Item 1153, as amended)

1990
1995
1998
2000
2003
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Act on insurance activity

• Main issues
• performing the profession of actuary
• change in the list of assets covering the
  technical provisions
• change of the value of the guarantee capital and
  the amounts when calculating the solvency margin
• strengthen position of the insurance supervision
• supplementary supervision of insurance
  undertakings in insurance group

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Act on insurance activity

• reorganisation and liquidation of the insurance
  companies
• organisation and functioning of the economic
  insurance self-government
• community co-insurance
• freedom to provide services, right of
  establishment and single license

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Solvency

• Solvency ability of an insurer to meet its
  obligation (liabilities) under all contracts at
  any time.
• circumstances the appropriateness of the assets
  to cover
• time horizon
• acceptable degree of probability of becoming
  insolvent
• (International Association of Insurance
  Supervisors)

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Problems?

• No insolvency no cry
• Polish case

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Polish market overview life insurance

• Premium
• Concentration
• Products

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Polish market overview premium
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(No Transcript)
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Polish market overview products
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Polish market overview products
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Polish market overview insurance agents
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Potential problems

• Macroeconomic situation
• New products

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Macroeconomic situation

• Capital market
• Technical rate

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Capital market - structure of assets covering
technical provisions
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Capital market - structure of assets covering
technical provisions
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Capital market - structure of insurance
companies' investments by place and maturity dates
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New products

• Old data
• No data

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Thank You

• Marcin Kawinski
• m.kawinski_at_rzu.gov.pl