A strategic perspective

The insurance market is facing strong competitive pressures due to aggressive pricing in the property insurance segment and the growing power of intermediaries. In response to these challenges, the PZU Group intends to focus on improving its pricing and risk segmentation processes to increase pricing accuracy and flexibility in adjusting offerings. At the same time, making claims handling more efficient by implementing a modern service system that will enhance customer experience will be a key direction of efforts.

In the life insurance market, offerings tailored to the needs of different generations are growing in importance. In view of this, a key direction in individual insurance will making the full range of offerings and processes available in digital channels, with a particular focus on individual continuation (IK), as well as developing products aimed at the silver and middle-age generations. In the group segment, maintaining a strong market position while increasing profitability, digitization and automation of processes will be a priority.

The PZU Group assumes a dynamic development of its bancassurance offering, focusing on stand-alone products and solutions linked to regular premium loans. These measures will allow the Group to fully utilize the potential of its banking assets.

In the health segment, the priority will be to increase profitability and revenue, develop self-service in digital channels, standardize patient pathways, and expanding the network of proprietary establishments, which will strengthen PZU’s position as a leader in comprehensive insurance and protection products.

Projects in renewable energy, grid modernization and transport are generating new risks, requiring specialist products, advanced analytics and closer cooperation with reinsurers. For insurers, this means having to develop competencies in assessing technological and regulatory risks and create solutions to support investment financing. According to the National Energy and Climate Plan (KPEiK), by 2030, investments in RES, grids, energy storage units, thermo-modernization and electromobility will amount to some PLN 1.1 trillion, which will significantly boost investment, thereby increasing the demand for insurance to accompany these projects.

Insurers are heavily deploying cutting-edge technologies, with a focus on artificial intelligence and machine learning to support the personalization of offerings, optimization of decisions and risk analysis. In recent years, most companies have increased the number of technology partnerships, including in the area of cloud services. Process automation solutions and customer service tools, such as chatbots and voicebots, are also being used increasingly often to streamline communication, reduce service time and cut costs while improving the customer experience. What remains a key challenge, however, is regulating responsible and legitimate use of AI, which may limit the full realization of its potential.

In the long term, the PZU Group’s business will be significantly shaped by two key trends: demographic changes and the growing affluence of society. Poland’s population is aging, and the working-age population is steadily declining. Projections by Statistics Poland indicate that by 2060, people in non-working age (0-17 and 60+/65+) will make up the majority of the population. This demographic structure will increase demand for health insurance covering the costs of chronic disease treatment, rehabilitation or long-term care, as well as for products that provide financial stability in retirement. Growing awareness of health risks may further accelerate the development of private health insurance, which is already experiencing rapid premium growth in Poland. At the same time, higher household income and wealth are changing consumer attitudes toward coverage. Customers are increasingly often opting for voluntary products, expecting higherquality service, personalization and innovative financial solutions. Increased affluence contributes to building financial awareness and trust in insurance institutions, which opens up space for comprehensive protection and long-term products. Such significant demographic and economic changes will create ample opportunities to develop PZU’s offerings to meet both the health-related and financial needs of society.

Economic growth contributes to increasing demand for insurance products and investment in innovation, creating a solid foundation for market growth. IMF forecasts average annual GDP growth in Poland of about 3% by 2030, supporting the sector’s expansion and increasing customers’ ability to purchase policies. What is more, rising household incomes make people more inclined to hedge risks, especially in health care and assets. Growth in private consumption and investment translates into greater demand for, among other things, motor and corporate insurance, which, combined with low market penetration, opens up space for dynamic growth in the sector in the coming years.

Climate change poses a serious threat to the long-term prospects of the insurance market. More frequent and more intense weather events such as floods, hurricanes and fires are causing a surge in payouts, putting a strain on insurers’ bottom lines and raising the price of coverage. As a result, there is increasing pressure on product availability, and some risks are becoming difficult to insure. According to Swiss Re’s forecasts, global insured losses caused by natural disasters will grow at a rate of 5-7% a year, which will translate into increasingly higher reinsurance rates, limited capacity and market withdrawal from the most exposed areas.

The Polish insurance market is characterized by a significant regulatory burden, which results from the implementation of both EU directives and national regulations. This means strong pressure to invest in IT and operational processes to ensure compliance with the new requirements. Key challenges include the continued implementation of the IDD, which strengthens consumer protection by increasing transparency in sales and advisory, and of the CSRD which requires detailed ESG reporting, covering the environmental, social and governance-related impacts of operations. The AI Act, which regulates the use of artificial intelligence in insurance products and customer service, is also an important element, requiring risk classification and compliance of algorithms with ethics and transparency. Additional pressure on the sector is coming from the Retail Investment Strategy (RIS) and FiDA, which are changing the rules for the distribution of investment products, affecting sales models, intermediary compensation and advisory processes. KNF’s recommendations on the analysis of the client needs (APK) and supervision of intermediaries, including in the area of bancassurance and the agency network, create additional challenges. The consequences include the need to integrate reporting and analytical systems, higher operational risks associated with simultaneous implementation of multiple acts, and pressure for efficiency and innovation in customer service.

Growing international tensions, trade conflicts and political instability are leading to disruptions in global supply chains, higher operating costs and more unpredictable risks in both assets and finance. At the same time, fiscal pressures from rising government spending and debt may result in increased taxes, reduced tax credits or the introduction of additional burdens on the financial sector. This, in turn, reduces insurers’ profitability, hinders their investment in innovation and limits their ability to offer competitive products. In the long term, these things can lead to a decline in investor confidence, an increase in the cost of capital and pressure on margins, which would consequently hamper market growth.

One of the significant challenges to the long-term development of the insurance market is the relatively low level of insurance awareness among the public, which results in underinsurance not only for households, but also for businesses and the public sector. Without knowing the benefits of coverage, many Poles view insurance as an unnecessary cost rather than an investment in financial security. This stifles innovation, limits product diversification and makes it difficult to build household resilience to risks that are becoming increasingly real in a rapidly changing world. In addition, the insurance gap, meaning the difference between the actual needs for financial security and what is realistically covered by insurance, reaches in Poland a level that is equal to more than a quarter of the state budget (figure from the Polish Chamber of Insurance (PIU)). Moreover, too many people do not adequately protect themselves against risk, as evidenced by the fact that half of all real estate remains without any kind of insurance policies, and only one in four cars is covered by MOD insurance.