I. Recent changes in Polish insurance law
On September 29, 2023, the Law of August 16, 2023, on amending certain laws in connection with ensuring the development of the financial market and the protection of investors in the market, entered into force. The law also introduces changes to Polish insurance law. The amendments are aimed at adapting the legislation to the constantly occurring institutional and legal changes. Some of them are merely editorial, but they also concern streamlining the activities of entities (e.g., through the use of electronic form). The most significant changes are presented below:
Insurance Distribution Law:
1. Professional training certificates. Both lectures and seminars in compulsory professional training can be conducted not only in traditional form but also using ICT systems. The change also applies to certificates confirming participation in training. Instead of the date of birth, the participant’s PESEL (i.e. Universal Electronic Population Registration System maintained in Poland) should appear on them.
2. Currently, an insurance agent, a supplementary insurance agent, an insurance company and a reinsurance company may perform agency activities, distribution activities of an insurance company and distribution activities of a reinsurance company, respectively, only with the assistance of a natural person who meets all the conditions indicated in the law (including entry in the register of agents).
3. Liability for damages. According to the new provision (Article 20), it is the insurance agent and the agent offering complementary insurance that is liable for violations of insurance law or damages caused to clients as a result of an unlawful act or omission of an individual performing agency activities pursuant to their authorization.
4. Register of insurance agents. The Polish Financial Supervision Authority (“KNF”), will make available to the insurance company, not more often than quarterly, summary information on the current entries in the register of agents covered by the company’s entry. As of March 1, 2025, the register of agents will include the agent’s email address. The e-mail address in the register is to be the same as that reported to the KRS and CEIDG (i.e. polish business registers).
In addition, the insurance company is now required to apply for entry also in the situation of a merger or demerger of an insurance company or an insurance agent or an agent offering complementary insurance, as well as an application for deletion of the agent from the register not only in the event of termination of the agency agreement, but also for other reasons attributable to the agent that led to the termination of the agency agreement. The KNF has also been given the authority to strike an insurance agent from the register of agents for reasons attributable to the insurer.
5. Control by the KNF. The amendments in this regard are aimed at introducing the possibility of electronic delivery with regard to control activities and other supervisory activities of the KNF not having the form of an administrative decision. Documents such as the authorisation to carry out an inspection, the inspection protocol, objections and comments to the inspection protocol, requests for explanations or recommendations of the KNF may be drawn up/administered/fixed and delivered in writing in an electronic form. They will then be delivered to the electronic delivery address. Evidence may also be recorded in electronic form.
Act on Compulsory Insurance, Insurance Guarantee Fund and Polish Motor Insurers’ Bureau
1. Insurance companies offering compulsory insurance were exempted from the obligation to provide the supervisory authority with information on the tariffs for compulsory insurance premiums, the basis for setting them and the changes made to the tariffs. Implementation of this obligation was inefficient due to frequent changes in tariffs.
2. The rules for insurance companies’ membership in the Polish Insurance Guarantee Fund (“UFG”) have changed. Currently, the requirement for membership is the actual performance of activities in this field. Previously, a member of the UFG was a company with a permit to carry out insurance activities in groups including compulsory insurance. The change applies to both domestic and foreign insurance companies.
3. Insurance companies were obliged to update the data submitted to the UFG within a strict deadline, i.e. immediately, no later than 7 days from the date of obtaining information about the event giving rise to the update. If the statutory deadlines for submitting data are violated, the supervisory authority may impose fines on the insurance company or a member of the insurance company’s management.
Act on Insurance and Reinsurance Activity
1. Insurance secrecy. The changes introduced by the Act expand the group of authorities at whose request an insurance company is obliged to provide confidential information regarding individual insurance contracts to include the Border Guard and the Central Anticorruption Bureau. The obligation of insurance secrecy now also does not apply to information provided at the request of another insurance company, reinsurance company, dominant insurer, non-regulated dominant insurer or mixed dominant insurer. Article 36(1) extends the group of bodies for which there is an obligation to keep information on the transfer confidential. Previously, the transfer of data was covered by secrecy only to the Police. Currently, it is also the Border Guard, the ABW, the CBA, the Internal Supervision Inspector and the Military Police.
2. Certain provisions on the financial management of insurance and reinsurance undertakings have also been amended. The aim is to ensure that these provisions comply with the provisions of the Solvency II Directive. Amendments have been proposed in a number of provisions to introduce the possibility of using electronic delivery in respect of control and other supervisory activities of the KNF that do not take the form of an administrative decision.
3. Insurance and reinsurance companies are exempted from the obligation to submit annual financial reports to the KNF, which the supervisory authority can independently download via the KRS. However, other obligations were imposed on them, consisting in informing the KNF about the selection of an audit firm to audit the report on the solvency and financial condition of the insurance and reinsurance undertaking.
4. A number of significant changes have been made to the chapter on the liquidation of an insurance and reinsurance company.
5. The provisions on supervision by the KNF, the possibility of using electronic delivery in relation to inspection and other supervisory activities of the KNF has been introduced. Insurance and reinsurance companies may provide the KNF with information necessary for the purposes of supervision not only in writing in paper form but also in electronic form. The supervisory authority has gained a new power to request data and information from insurance and reinsurance companies at the request of the EIOPA.
6. Another significant change is also the increase of the maximum amount of penalties imposed on members of the management board of an insurance or reinsurance company (from PLN 100,000 to PLN 3,000,000), as well as on insurance and reinsurance companies (up to PLN 20,000,000) in the event of failure to comply with the KNF’s decision on previously issued recommendations. Provisions have been added enabling the KNF to impose administrative fines on entities that violate prohibitions or restrictions set out in intervention decisions issued under Article 16 or Article 17 of the PRIIPs Regulation.
II. Challenges for the Polish insurance market in 2024
Experts at PIU (Polish Insurance Association) have compiled a list of challenges facing the insurance industry in Poland in 2024 (read more: https://piu.org.pl/blogpiu/zyjemy-w-wymagajacych-czasach-wyzwania-dla-ubezpieczen-na-2024-r/). Among the most important of these are changes in the industry’s legal environment and the impact of macroeconomic and climatic factors:
1. Inflationary pressures. One of the priorities of the insurance market in Poland will be to convince those affected by inflation to maintain their existing insurance coverage. Discussions have already begun on insurance distribution as part of changes to distribution recommendations.
2. New risks. A large number of natural catastrophe claims could be a challenge in 2024. The sector will also be dealing with fire safety and energy transition. New risks, such as those associated with the rise of electric cars, will be an important focus for the sector. Technological advances are also bringing new types of construction materials, machinery and equipment, as well as raw materials and semi-finished products to the market, which generates further new risks.
3. EU legislation. The insurance industry will also face increasing regulatory challenges in 2024, especially in the context of the implementation of Recommendation U. In addition, one of the main topics in the life insurance field in 2023 was the European Commission’s Retail Investment Strategy project. It changes the rules for the distribution of investment products, both for the capital market in terms of MiFID II and the insurance market in terms of the Insurance Distribution Directive (IDD). PIU intends to take measures to limit the negative effects of the EC’s proposals, as it believes that many of the proposals in the draft are unfavorable for the Polish insurance market.
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