“The profitability of insurers operating in Poland has been growing steadily for a few years with ROAE exceeding 20% in 1H 2019 in both life and non-life segments” said Marcin Mazurek, director of Inteliace Research, during a presentation of Inteliace's latest report, Insurance Market in Poland, 2019-2021.
Poland has the largest insurance sector in the CEE with nearly € 15 billion in premium written p.a. and a 40 % share in the CEE14 region. Premium in the non-life insurance segment in Poland jumped by 7% in 2018 and by 3% in 1H 2019, and it is expected to top PLN 42 billion by year end 2019. By contrast, the premium in the life segment continued to decline, falling by nearly 12% in 2018 and going down again by another 3% in 1H 2019.
Recent years have been particularly challenging for life insurers as the regulatory developments and disclosure rules have changed the way life products are distributed. This led also to significant changes in market shares as less adaptive players lost the business while more flexible players gained market share and reinforced their position. Increasing regulatory pressure has also triggered the market consolidation. After multiple M&A transactions recorded in 2018, there are new deals upcoming with the recently speculated withdrawal of AXA. The ongoing consolidation in the insurance sector is for sure taking out some pressure from the market in terms of pricing and tariffs as well it is helping to increase the scale of operations for the survivors.
Both, life and non-life insurers have seen improving profitability in 2018 and in the first half of 2019. This has been primarily an effect of increasing automation and a better cost control. The combined ratio for non-life insurers (CR) remained below 90% on average while it stood below 96% in both TPL** and Casco car insurance. The overall net profit of non-life insurers increased to 4.2 billion as of 2018. Similarly, a favourable trend in profitability could be observed within the life insurance sector. Despite falling premium written, life insurers managed to improve the bottom line to PLN 2.4 billion.
The mid-term outlook for insures operating in Poland remains positive, although there are multiple challenges ahead. Within the non-life segment, a further automation of processes and a more advanced risk assessment will be key to stay ahead of competition. Also the increasing consolidation and withdrawal of players who aggressively undercut prices (e.g. AXA - car TPL) will provide some relief in terms of tariffs.
Within the life insurance segment, the premium income is expected to stabilize as insurers adjust their product and service portfolio to a new regulatory regime.
For more information on recent developments in the Polish insurance sector, please refer to the publication “Insurance Market in Poland, 2019-2021” at:
http://www.inteliace.com/en/00175_Insurance_market_in_Poland_2019_2021.html
Inteliace Research
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Inteliace Research is an independent consulting company that focuses on the financial markets in Central and Eastern Europe. Inteliace Research specializes in management consulting and custom research services, including market-entry strategies, product launches, and performance and benchmarking analyses.
During 2005–2019, Inteliace Research provided its products and services to more than 70 clients, including major CEE insurers and banks. To learn more about the company, visit Inteliace Research’s webpage: www.inteliace.com.
