Claims and technical provisions

In 2013, the net value of claims and benefits, as well as the increase in the PZU Group’s provisions amounted to PLN 11,161.2 m. Additional provisions of PLN 1,032.8 m were established in 2012 because of the decline in the technical rates and consequently the value of claims including a change in provisions was 8.7% lower. The following factors also contributed to the decline in the net value of claims and benefits:

  • a low level of damage related to the negative effects of overwintering, a lack of frost and floods in the summer in agricultural insurance, whereas in the years 2011-2012, a high level of claims was recorded in this respect which led to negative returns on this product;
  • the lack of need to establish additional provisions for claims in financial insurance with regard to contract guarantees;
  • the maintenance of a low loss ratio in motor insurance due to improved road conditions and lower traffic intensity (low loss frequency);
  • a lower increase in technical provisions for unit-linked products as a result of deteriorating investment activity results, which, with a simultaneous drop in investment income, had no impact on the PZU Group’s results;
  • a lower increase in the technical provisions in continued protection insurance as a result of modifying the product, which affected the amount of technical provisions established upon the insured’s transfer to the individually continued phase;
  • optimization of the claims handling processes.

On the other hand, the following contributed to the increase in the net value of claims and benefits:

  • a lower rate of conversions of long-term contracts to renewable annual contracts in type P group insurance (the effect of conversion in 2013 translated into a release of PLN 127.1 m of provisions, i.e. PLN 79.9 m less than in 2012);
  • an increase in life insurance provisions for individual investment products in the bancassurance channel as a result of high sales of new insurance.