Polish and Baltic States insurance sector compared to Europe

The European insurance market generates approximately 31,6% of the world’s gross written premium¹. According to the data published in September 2019² active insurers in Europe, in countries associated with Insurance Europe acquired in 2018 EUR 1,311 billion of GWP. 2018 was a difficult year for the insurance market due to the intensive price war, major uncertainty on the financial markets and the risk of an economic recession. The problems faced the European Union have exacerbated – migration policy, law-abidingness and financing of structures have become the trouble spots sources of friction between member states. The strengthening of conservative factions and uncertainty of actions had negative impact on medium – and long-term investments in the region. This also translated into consequences for the European insurance market.

In 2018, the statistical European spent EUR 1,958 on insurance, whereas the average Pole spent EUR 436, or more than 4 times less. Insurance spending in the Baltic states was even lower. In 2018, the average Lithuanian spent EUR 278 on insurance, the average Estonian spent EUR 270 and the average Latvian spent EUR 140. In 2018, the average Ukrainian spent only EUR 38 on insurance.

In Poland, the market insurance model has been developing since 1990. Currently, Poland has the largest insurance market in Central and Eastern Europe. However, even though the size of this market (as measured by gross written premium) more than doubled between 2009 and 2018, it still remains way behind Western Europe. In 2018, total gross written premium in the Polish market was EUR 13.9 billion (compared to EUR 6.8 billion in 2009)2. Europe’s largest insurance market is the United Kingdom (with EUR 341.6 billion in gross written premium in 2018). Markets above the EUR 100 billion gross written premium threshold include France (EUR 219.4 billion), Germany (EUR 202.4 billion) and Italy (EUR 135.1 billion). In terms of size, the Polish insurance market also trails certain West European countries with a significantly smaller population than Poland, including Austria (EUR 17.3 billion), Belgium (EUR 27 billion), Denmark (EUR 31.8 billion), Finland (EUR 23.4 billion), the Netherlands (EUR 72.3 billion), Switzerland (EUR 51 billion) and Sweden (EUR 31.3 billion).³

Gross written premium per capita (2018, EUR) in relation to the insurance market growth rate

Source: Eurostat, Insurance Europe, Swiss Re Institute (sigma 3/2019)

The structure of the Polish market is dominated by non-life insurance (approx. 65% of the market), with the majority of gross written premium generated by motor insurance. In 2018, gross written premium collected on motor third party liability insurance and motor own damage insurance accounted for 39% of the entire market’s gross written premium⁴. The share of life insurance in Poland’s total gross written premium (35%) was, in turn, a third lower than the European average. A similar structure of insurance markets is also typical of the Baltic states. In those countries, life insurance, on average, accounts for less than 30% of total gross written premium. This situation is completely different from that of West European countries where life insurance takes the bigger chunk of the market. In 2018, nearly 58% of insurance premiums in Europe was generated in life insurance, 31% in non-life insurance and 10.6% in health insurance⁵. Countries with the most developed life insurance market are countries that also have the largest insurance markets. These include Italy (in 2018, life insurance accounted for 75.3% of gross written premium), the United Kingdom (69.5%), France (63.6%) and the Scandinavian states: Finland (81.3%), Sweden (78.5%) and Denmark (70.6%).

Poland’s insurance penetration rate, which is the ratio of total gross written premium to gross domestic product (GDP), is below the European average. In 2018, this rate stood at 2.8%, whereas the Europe average was 7.5%⁶. Even lower penetration rates were achieved in the insurance markets of Lithuania (1.9%), Latvia (2.6%), Estonia (2.2%) and Ukraine (1.5%)⁷. The highest penetration rates were recorded by the United Kingdom (10.6%), Denmark (10.4%), Finland (9.9%) and the Netherlands (9.2%)⁸.

Penetration of insurance in relation to GDP per capita in Europe (2018, EUR)

Source: Eurostat, Insurance Europe, Swiss Re Institute (Sigma 3/2019)

Analyzing the penetration of insurance in relation to GDP per capita, it should be expected that the Polish insurance sector will develop alongside Poland’s economic development (growing GDP), greater affluence of the society (increasing disposable household incomes) and growing insurance awareness of the local population, which was exactly the path taken by West European countries.

1 Swiss Re, sigma 3/2019: World insurance: the great pivot east continues
2 As at the date of the report, the most up-to-date data for Europe’s insurance market are available for 2018
3 Swiss Re, sigma No 3/2019: World insurance: the great pivot east contiunues
4 KNF, Annual bulletin. Insurance market 2018, updated on 26 September 2019
5 Insurance Europe, European Insurance – Key facts 2019
6 Insurance Europe, https://insuranceeurope.eu/insurancedata
7 Deloitte, CEE Insurance M&A Outlook, update – October 2019
8 Insurance Europe, https://insuranceeurope.eu/insurancedata