Situation on the market

The life insurance market in Poland measured by the gross written premium increased by an annual average of 0.8% over the past 4 years. The premium collected in 2013 was 14.1% lower than in the same period of the previous year, which means a major decline after a series of increases. The rates of growth for the same periods of 2012, 2011 and 2010 were respectively 14.3%, 1.3% and 3.7%.

Gross written premium of life insurance companies in Poland (in PLN million)

Source: PFSA (www.knf.gov.pl). Biuletyn Kwartalny [Quarterly Bulletin]. Rynek Ubezpieczeń [Insurance Market] 4/2009 - 4/2013.

It should be pointed out that the decline in the premium year-on-year applied exclusively to the single premium, for which exceptionally high growth of 22.5% year-on-year was achieved in the same period of 2012. This decline mainly applied to the written premium obtained through the bancassurance channel (a decline of PLN 3.9 bn, i.e. 20.6% year-on-year) (1).

The source of the exceptional rate of growth of the single premium and group insurance for the 2012, which constituted the high base for the same period of the following year, was the prohibition to benefit from the gap in the tax regulations regarding the lack of application of the flat-rate tax on overnight deposits and the resulting increase in interest in single premium insurance, mainly in the bancassurance channel (the so-called deposit policies).

As a result, the share of the bancassurance channel in the life insurance premium obtained by the market declined with respect to the same period of the previous year by 4.0 p.p. to a level of 48.8%(1), which, despite everything, suggests that the bancassurance channel is of great importance to the insurance revenues earned by insurance companies.

The result of the changes taking place on the market is the return to the relative primacy of the regular premium over the single premium, which is PZU Życie’s competitive advantage on the market.

Life Insurance companies - share of the gross written premium in 2013 (in %)





The expected changes in the law introducing taxation on deposit policies and their lower yield because of low interest rates on the market have contributed to the continued declining trend in sales of these products, thereby generating greater interest in investment risk borne by the customer. These changes significantly contributed to the 32.2% year-on-year decline in the written premiums in life insurance (group I) and the 8.3% year-on-year increase in written premiums related to unit-linked life insurance, despite the decline in income from investments in this insurance group by as much as 60.8% year-on-year. This is a quantifiable effect of the search by customers of insurance companies to fill the market gap after the withdrawal of the deposit policies from the market.

The gradual increase in the attractiveness of employee pension programs (EPP) should be noted on the life insurance market. The increase in the premium collected by life insurance companies from the EPP was 6.8% year-on-year in 2013. However, the annual average growth rate in premiums measured from 2009 to 2012 was 8.1%. Simultaneously, the share of life insurance companies in the premiums paid within the EPP, increased from 32.8% in 2009 to 33.2% in 2012. At the end of 2012, just 2.3% of Polish workers were covered by EPPs, which is why the market has huge growth potential.

Life insurance market – gross written premium (PLN m)

 20132012
PZU ŻycieMarketMarket excluding PZU ŻyciePZU ŻycieMarketMarket excluding PZU Życie
Regular premium 6.948 16.037 9.089 6.818 15.806 8.988
Single premium 1.895 15.227 13.332 2.495 20.571 18.076
TOTAL 8.843 31.264 22.421 9.313 36.377 27.064

Source: PFSA (www.knf.gov.pl). Biuletyn Kwartalny[Quarterly Bulletin]. Rynek ubezpieczeń [Insurance Market] 4/2013, 4/2012, PZU Życie's data

The total technical result of life insurance companies achieved in 2013 was PLN 139.3 m (4.4%) lower than in the corresponding period of the previous year, mainly because of the lower profitability of life insurance – a decline of PLN 101.5 m (-11.5%) in the technical result.

During this period, life insurance companies generated a net result at a level of PLN 2.8 bn, which constituted a decline of 4.8% (PLN -143.0 m), mainly due to the poorer results on investment activities.

Life insurance market – gross written premium vs. technical result

20132012
PZU ŻycieMarketMarket excluding PZU ŻyciePZU ŻycieMarketMarket excluding PZU Życie
Gross written premium 8,843 31,264 22,421 9,313 36,377 27,064
Technical result 1,823 3,001 1,178 1,828 3,140 1,312

Source: PFSA (www.knf.gov.pl). Biuletyn Kwartalny [Quarterly Bulletin]. Rynek ubezpieczeń [Insurance Market] 4/2013, 4/ 2012, PZU Życie’s data

Despite the poorer climate on the capital market  and the increase in treasury bond yields, the value of investments of life insurance companies increased slightly with respect to the previous year. The total value of investments of life insurance companies at the end of 2013 amounted to PLN 95.3 bn, which means growth of 0.9% compared with the end of 2012. In particular, the higher premium contributed to an increase in the net assets of life insurance, if the investment risk is borne by the policyholder (increase of 10.5% to PLN 49.8 bn).

Life insurance companies, on aggregate, estimated the value of technical provisions at PLN 83.2 bn, which represented 87.4% of the value of the investments.

Life insurance market – gross written premium




(1) PIU data (www.piu.org.pl), The bancassurance market after the fourth quarter of 2013