POLSKA IZBA UBEZPIECZEN

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POLSKA IZBA UBEZPIECZEN

• EFFECTS OF FOREIGN INVESTMENTSFOR THE
  DEVELOPMENTOF INSURANCE INDUSTRY IN
  POLAND(1990-2005)
• ANDRZEJ PITYNSKI
• Polish Chamber of Insurance

Kiev, 26-27 June 2006
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INSURANCE MARKET FACING POLITICAL AND ECONOMICAL
TRANSFORMATION

• In 1989 Poland has started its political and
  economical transformation by creating a
  democratic state and market economy
• By organizing financial services markets main
  orientation was the adopting of the EU
  principles
• free movement of capital
• free movement of goods and services
• free movement of persons
• In case of insurance industry it effected in
• step by step implementation EU insurance
  directives ( of I and II, then of III and IV
  generation),
• privatization and demonopolization by opening
  for the foreign investments.

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LEGAL PREMISES FOR POLISH INSURANCE MARKET
DEVELOPMENT
28th July 1990 Act on insurance activity and its
further amendments

• Insurance activity can be organized only in form
  of stock company or mutual insurance company
• Division into life insurance and non-life
  insurance branch
• State insurance supervision (since 1995 PUNU,
  since 2002 KNUiFE)
• Insurance Guarantee Fund (UFG) (since 1990)
• Green Card Bureau (PBUK) (since 1995, before GCB
  activity not covered by the Act)
• Insured rights protection (Insureds Ombudsman)
  (since 1995)
• Foreign insurance companies main branch allowed
  (since 1999)

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CODIFICATION OF INSURANCE LAW
The four new insurance acts from 22th May 2003
assume fulfilmentof all 3rd generation
directives and the 4th motor insurance UE
directive
Most important modifications introduced by the
new acts

• principle of insurance service freedom including
  the single passport principle,
• new content and information requirements for
  insurance contracts,
• extending territorial range of the motor
  insurance cover (UE territory),
• imposing the obligation on the insurer to
  appoint a claims representative in every EU
  Member Country
• waiving the principle of licencing insurance
  agents by a supervision body and introduction of
  obligatory registration according to the EU
  practice.

Codification of insurance law effected in
significant increase of customer protection.
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SINGLE SUPERVISION PRINCIPLE

• The possibility to perform insurance activity on
  the territory of European Economic Area (EEA)
  under the single supervision body,
• The Act from 22 May 2003 on insurance and pension
  supervision enables to act according the single
  supervision principle effective since 1. May
  2004
• Single passport principle means, that an insurer
  licensed in any EEA country can perform insurance
  activity in other EEA country so far it has
  notified its will in this countrys supervision
  body.

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OPENING OF THE MARKET FOR FOREIGN
INVESTMENTSMOST IMPORTANT EFFECTS

• Increase of the competition - dynamic growth of
  the number of insurance companies in Poland
• Market Capitalization Increase of Polish
  insurance companies capital as a direct effect of
  foreign investments
• Privatization and demonopolization of the market
• Know-how transfer
• Emerging of new possibilities

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INSURANCE MARKET IN POLANDNUMBER OF INSURANCE
COMPANIES (1993-2005)
Dynamic increase of insurance companies number in
90sespecially in life branch
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Source PIU
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INSURANCE MARKET IN POLANDNUMBER OF INSURERS2
YEARS AFTER POLANDS EU ACCESSION (April 2006)
After Polands EU accession many foreign insurers
are interested in acting on Polish territory.
Their presence speeded the competition between
the domestic players.
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Source KNUiFE
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MORE COMPETITIVE MARKET

• The scale of cross-border trade still not known,
  however limited
• Increase of competition between domestic insurers
  contributes to the improvement of insurance
  service quality
• Foreign investments into insurance companies
  environment
• Distribution channels (brokers and
  multi-agencies)
• Claim-settlement and assistance companies

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MARKET CAPITALIZATION SHARE CAPITAL GROWTH OF
POLISH INSURANCE COMPANIES (1993-2005)
(Mio PLN)
Source PIU
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FOREIGN INVESTMENTS SHARE OF FOREIGN CAPITAL IN
TOTAL SHARE CAPITALOF POLISH INSURANCE COMPANIES
(1994-2005)
Foreign investments were a source of capital and
a crucial factor for the stability of the Polish
insurance companies condition.
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Source PIU
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DIRECTIONS OF FOREIGN INVESTMENTS COUNTRY SHARES
in SHARE CAPITALSof POLISH INSURANCE COMPANIES
(2005)
3,65 Bln PLN
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Source PIU
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MARKET DEMONOPOLIZATION Five top insurance
companies share in gross written premium
(1993-2005)
Entering of new market players resulted in market
demonopolization
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Source PIU
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KNOW-HOW TRANSFER

• New management methods and corporate standards
• Product innovation
• Introduction of new marketing concepts
• Training for the top and middle-range managers of
  insurance companies based on the experience
  sharing from more mature markets
• Corporate training in insurance companies
• Collaboration between insurance associations
  (FFSA, GDV)

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EMERGING OF NEW POSSIBILITIES

• Developing of further investments in Eastern
  Europe basing on experience and human resources
  of Polish insurance companies
• Baltic states
• Ukraine
• Belarus
• Outsourcing of back-office processes to Poland
• IT Centers

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OPENING OF THE MARKET FOR FOREIGN
INVESTMENTS WHAT HAVE BEEN ACHIEVED?

• Rising the scope of the protection of the
  insurance services customers
• Improvement of the financial condition of
  insurance companies

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QUESTIONS ?
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THANK YOU
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