Regulations on the insurance market in Poland

The main legal regulations concerning insurance and other business activities, which entered into force, or were adopted or published in 2013, that may affect or change the PZU Group’s business or organization, are presented below:

The Act of 14 December 2012 on amending the Insurance Activity Act of 22 May 2003, which entered into force on 29 January 2013 and implemented changes in the domestic legal order, which arise from the judgment of the Court of Justice of the European Union of 1 March 2011 regarding the lack of possibility to diversify insurance premiums or benefits due to the gender of the person insured.

The legal amendment mainly applies to a subsidiary – PZU Życie. At the same time, the new wording of the Act still allows insurance companies to apply gender as a criterion in the calculation of insurance premiums and benefits, but only under the condition that it does not lead to differentiating individuals’ insurance premiums and benefits.

Minister of Finance Regulation of 8 March 2013 amending the Minister of Finance Regulation of 24 November 2003 on the level of the percentage contribution paid by insurance companies to the Insurance Guarantee Fund and the dates of payment of this contribution, which came into force on 31 March 2013.

According to the regulation, insurers pay the Insurance Guarantee Fund 1.3% (an increase of 0.3 p.p.) of the gross written premiums in a given calendar year on TPL motor insurance and TPL insurance of farmers.

Draft of the Insurance Activity Act due to the implementation of Solvency II

The Ministry of Finance published a further draft of the assumptions to the new Insurance Activity Act in May 2012. The objective of this work is, among other things, to implement the provisions of the Solvency II Directive on solvency requirements into Polish law(1). The timing for the implementation of these changes is not currently known.

The new act will introduce significant changes in the business and financial management of insurance and reinsurance companies, which will result in a need to make many organizational changes and incur substantial costs. It is difficult to estimate them at the present stage. These costs will probably be spread over time.

Products data sheets. In 2013, the Polish Insurance Association (PIU) adopted a Recommendation of Information Best Practices relating unit linked life insurance policies. The main point of the recommendation is the Product Data Sheet, which will be received by every customer considering purchase of investment product from a life insurance company, which accedes the Recommendation.

The customer will be warned that such a policy is related to the risk of a loss in value or a loss of all invested funds. He will also receive information about the level of all charges related to the insurance product and three variants of the course of the insurance (the base variant, a variant with a reduced profitability and increased profitability). Therefore, the Product Data Sheet will give the ability in a simple cost comparison, as well as indicate the risk of every unit linked life insurance policy.

Although the Chamber does not have the right to issue obligatory recommendations and its application is voluntary, up to 98 percent of life insurance companies (measured by the written premium within the framework of unit linked life insurance products) have declared that they intend to implement it. In accordance with the schedule proposed by the PFSA (Polish Financial Supervision Authority) insurers shall fully adapt to the provisions of the Product Data Sheet until May 2014.

On 28 August 2013, PZU Życie declared that it would join the recommendation and implement it no later than by 1 May 2014.

(1) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II),