Recently, two contradictory trends have been shaping the insurance market in Poland. The life insurance segment has remained in a downturn, as it continued to suffer from tighter regulatory environment in multiple areas, including: consumer protection, distribution, fiscal treatment etc. Moreover, an overall negative sentiment around insurance investment products and low interest rate environment have not helped new product sales. By contrast, the non-life segment has seen significant growth in new premium collection. This could be attributed mostly to surging car insurance premium, which has been an effect of both: increasing tariffs and a higher number of contracts.

It is remarkable that even after significant increases in tariffs, TPL insurance is still unprofitable on average, which indicates that further tariff increases are in the pipeline. By contrast, the profitability of life insurers, which has been traditionally quite high, remains in a declining trend. This is driven mainly by lower returns on investments and significantly higher regulatory costs.

Considering the high competition among insurers, continuously growing claim costs, and persisting low returns on investments, resulting from low interest rates, the profitability of insurers will remain under pressure in 2017 and 2018. Most advanced insurers will address the issue of lower profitability with further automation of processes, reduction of operating costs and more sophisticated anti-fraud measures. Also new, innovative solutions will be high on agenda with usage-based insurance, telematics and multi-channel distribution models being a source of competitive advantage. Read the full story POLAND's Insurance Sector to Grow in 2017 But Profitability Under Pressure