Development Trends in Motor Insurance in Poland - Selected Issues on the Example of the Adequacy of the Premiums

Technical loss recorded by insurance companies in MTPL (Motor Third Party Liability) historically has never been so huge. It reached a level of over 1 billion PLN (appx. 233 M Euro). In addition, usually in profitable casco insurance (damage and theft) also demonstrated a significant decrease in profitability. The Polish Motor insurance market is characterized by a heavy regulation as well as a very competitive environment. There is a consolidation of the insurance market and changing of the profile activity from direct to multichannel. Unfortunately, Motor insurance is a loss-making product, which is used to attract customers to whom it is then possible to cross-sell more profitable products such as Personal Accident, Tires, Assistance and other riders. 4Q of 2015 and 2016 was the period of increasing pricing in Motor insurance, especially in MTPL to ensure a sufficient level of profitability on the Motor product. However, Motor profitability significantly deteriorated in 2014, and the deterioration continued in 2015 with slight improvement in 2016. The main reasons for such deterioration were: 1) Loss on the insurance market, in particular with regard to MTPL, mainly due to the inadequacy of the premiums that insurance companies charge from customers. 2) The inadequacy of contributions is due to two main factors: very low premiums resulting from the price war between insurance companies and rising costs, especially in terms of the amount of compensation paid and benefits. 3) The impact to increase the costs relating to the claims and compensations are mainly due to changes in the regulations, recommendations of supervision and court rulings. 4) There is a inflation cost, mainly in the field of BI The currently rising premiums in motor insurance may not be sufficient due to the planned changes by the government, such as the introduction of a Religa bis tax (co-funding for the treatment of road victims) or paying compensation in car damage only on the invoice system (no cash). This research is based on the analysis of: • legislative, judicial decisions and recommendations of the supervisory authority • insurance indicators on the basis of the data available on the websites of supervisory authority and annual reports of insurance companies • observation of the insurance market and ongoing trends in the amount of the premium, the level of damage and compensation and the method of claim process.