PZU’s activities

Within the PZU Group, activities on the non-life insurance market in Poland are conducted by the parent company in the Group, i.e. PZU.

Over the past years, PZU has been managing approximately 1/3 of the non-life insurance market. At the end of 2013, it had a 31.1% share of the non-life insurance market (compared with 32.2% in 2012). The Company had a relatively strong market position in a motor own damage insurance (with a share of 38.0%). Meanwhile, in the case of motor insurance for corporate customers, this share was even higher, amounting to 49.2% for TPL motor insurance and 43.6% for motor own damage insurance.

PZU has been pursuing a corporate insurance portfolio restructuring program for several years in order to maintain profitability. These measures have resulted in a significant improvement in PZU’s technical results for motor TPL insurance in the corporate customer segment (the Combined Ratio fell by 7.9 p.p. in 2013 compared with the same period of 2012) while the market share increased. Overall, the technical result in non-life insurance increased by PLN 665.5 m, i.e. 100.1%, of which PZU’s result alone was PLN 421.7 m, or 65.9% higher.

In 2013, the share of PZU’s net result to the market’s net result (excluding dividends from PZU Życie) was 55.0%, which, with a market share of 31.1% calculated using the gross written premium, confirms the high level of profitability of insurance and effective asset management.

PZU offers a wide range of non-life insurance products, including motor, property, personal, agricultural insurance, as well as TPL insurance. PZU’s product range encompassed 200 insurance products at the end of 2013. Motor insurance is the most important group of products offered by PZU, both in terms of the number of valid insurance contracts, as well as the share of the premium to the total value of gross written premiums.

During 2013, PZU made changes to its product offering, with customers in mind, which included basic categories of insurance products addressed to all customer segments.

In 2013, the changes in the offer dedicated to the mass market consisted of:

  • the introduction of changes in the TPL and motor own damage insurance tariffs for individual customers and SMEs on 1 May 2013, in order to adapt to the market conditions;
  • the definition of general terms and conditions of motor insurance and the wide range of scales of motor insurance premiums for the mass market customer and entrepreneur with a small fleet, as well as for non-life insurance (PZU Dom – PZU Home), for insurance contracts which are to be registered in the new IT system respectively from the fourth quarter of 2013 and the first quarter of 2014;
  • the activation of a new application “Przeglądarka UFG” [UFG Browser]enabling verification of customer statements about their claims history in motor insurance at the time of sale;
  • the introduction of changes into the offering of obligatory subsidized crop insurance in the spring season, in order to improve profitability. (These changes were dictated by the high level of claims in 2011–2012);
  • withdrawal of a product differentiating the premium by gender – individual insurance for daily hospital benefits, in accordance with the guidelines of the European Commission on the European Union Gender Equality Directive.

While improving the offer for corporate customers in 2013, PZU simultaneously took into account the need to increase the profitability of cooperation with this customer segment. Primarily, PZU:

  • Modified the existing tariff premiums for motor own damage and TPL insurance. This change arose from the increasing competition in motor insurance for corporate customers and involved the adjustment of premiums to market conditions while maintaining a safe technical result in these products. In addition, it changed the limit of the number of vehicles designating the size of a fleet of vehicles, on which, among other things, the level of the premium depends. It was accepted that a small fleet comprises up to 40 vehicles, while a large fleet consists of at least 40 vehicles.
  • Upheld the importance of underwriting in the area of non-life insurance through selective insurance sales, including to entities from sectors with high claims levels, ongoing improvement in the risk management process and the general application of additional clauses and other technical limitations changing the scope of the insurance.
  • In TPL insurance, it consistently used tools to assess the risk and tailor the insurance terms and conditions and the quotation rules to the level of risk accepted for insurance. However, in TPL medical insurance, it more frequently used medical risk assessments (medical visits to hospitals, questionnaires).

In terms of financial insurance for corporate customers PZU assumed most of all:

  • Upheld the moratorium on sales of guarantees to companies performing construction contracts in the initial months of 2013. In April 2013 sale of guarantees to companies from the construction sector with revenues of over PLN 30 m was unblocked, simultaneously heightened risk assessment criteria. Sales of guarantees to smaller companies operating in sectors related to construction were still subject to strong restrictions.
  • Signed a low down-payment insurance contract with mBank Hipoteczny S.A.

Furthermore, PZU continued to work on the launch of new products intended for corporate customers, such as insurance of the risk related to making lease payments until the establishment of the mortgage, insurance of the risk of paying a lease with regard to absence of the lessor’s down-payment and portfolio non-life insurance.

In 2013, PZU also tightened its cooperation with trading partners with large customer databases or supporting mass payments (including electricity companies and large retail chains). And so, within the framework of the strategic partnership, it introduced new types of insurance, such as insurance of electronic equipment (telephone, laptop), home fittings, hospitalization, TPL in private life and Dom Assistance [Home Assistance].

In the area of bancassurance, PZU continued to work with the leading banks operating on the Polish market (including PKO Bank Polski, ING Bank Śląski, Bank Millennium and BGŻ). PZU offers the customers of these banks, among other things, card payment protection programs, as well as buildings and premises insurance attached to mortgage loans. In 2013, sales of PZU’s products offered in cooperation with the banks were expanded to include new channels, i.e. electronic banking and telemarketing.

PZU’s research indicates that, apart from price, crucial to customer loyalty is the process of claims handling and payment of benefits. The implementation of improved claims handling procedures for TPL and non-life insurance has resulted in reducing the average time of claims handling in PZU.   In 2013, it was 16.8 days and was 3.4 days shorter than in 2011 and 1.2 days longer than in 2012.

Gross written premium of PZU (in PLN million)

In 2013, PZU collected gross written premiums of PLN 8,273.9 m, which was 2.1% more than in the previous year. At the same time, its structure changed in comparison with the previous year, namely:

  • The value of TPL motor insurance was PLN 2,827.2 m, which was 4.5% lower than in the previous year. This represented 34.2% of the overall portfolio, i.e. its share remained at a similar level to that of 2012. The drop in the value of TPL motor insurance at PZU resulted mainly from lower sales of new cars and increasing competition in the market, which led to a fall in prices of policies. The increase in the number of motor insurance policies for corporate customers did not fill the gaps after the drop in prices of policies.
  • PZU collected PLN 2,028.2 m from motor own damage insurance, which was 5.3% less than in the previous year. The slight increase in the number of insurance policies did not compensate for the effect of the drop in the average premium which contributed to growing competition, the ageing portfolio and the increase in no claims bonuses discounts. As a result, the share of the total motor own damage premium declined from 25.3% in 2012 to 24.5% in 2013.
  • The rapid growth in sales of insurance, such as: PZU DOM Plus [PZU HOUSE plus], PZU Doradca [PZI Advisor] and agricultural insurance, contributed to the 2% growth in written premiums from the other products. As a result, the share of gross premiums from non-motor insurance to the total premium increased to a level of 41.3% (39.6% in 2012).

In 2013, PZU settled gross claims and benefits amounting to PLN 4,301.9 m, which was 5.0% less than in the previous year.

In 2013, PZU generated a net profit of PLN 5,106.3 m, of which PLN 3,842.9 m was from the dividend from PZU Życie.