Polish and Baltic States insurance sector compared to Europe

Insurers running their businesses in European Union countries collected EUR 1,047 billion in premiums in 2019. This accounts for approx. 18.6% of the world’s gross written premium¹.

Concerns regarding the more pronounced global slowdown in economic growth, commercial tensions and the risk of persistently low interest rates, especially for life insurers appeared on the insurance market in 2019. The topic of climate change and the losses it will generate for society and the economy showed up in discussions. Insurers faced challenges such as the technological transformation of the insurance markets, cybersecurity and data security, as well as the growing significance of ESG factors. Despite the detection of the first case of the SARS-CoV-2 coronavirus infection on 17 November 2019 in the city of Wuhan in the Hubei province in central China, nobody had imagined the consequences the COVID-19 pandemic would evince for the functioning of the global economy and the global financial markets.

In 2020 the statistical European spent EUR 1,997 on insurance². A year earlier, it was EUR 1,958³. In 2018, 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 38⁴ on insurance.

In Poland, the market insurance model has been developing since 1990. At present, 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)⁵. In 2019, it was converted into EUR 13.8 billion⁶.

Europe’s largest insurance market is the United Kingdom (with EUR 327.2 billion in gross written premium in 2019). Markets above the EUR 100 billion gross written premium threshold include France (EUR 234.3 billion), Germany (EUR 217.9 billion) and Italy (EUR 150.0 billion). In terms of size, the Polish insurance market also trails behind certain Western European countries with a significantly smaller population than Poland, including Austria (EUR 17.6 billion), Belgium (EUR 32.5 billion), Denmark (EUR 33.2 billion), Finland (EUR 24.4 billion), the Netherlands (EUR 74.7 billion), Switzerland (EUR 52.7 billion) and Sweden (EUR 34.3 billion)⁷.

The structure of the Polish market is dominated by non-life insurance (approx. 67% of the market), with the majority of gross written premium generated by motor insurance. In 2019, 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 premium⁸. The share of life insurance in Poland’s total gross written premium (33%) was, in turn, a third lower than the average for West European markets. A similar structure of insurance markets is typical of the Baltic states. In those countries, life insurance, on average, accounts for approx. 25% of total gross written premium⁹.

This situation is completely different from that of West European countries where life insurance takes the bigger chunk of the market. Countries with the most developed life insurance market are countries that also have the largest insurance markets. These include Italy (in 2019, life insurance accounted for 74.0% of gross written premium), the United Kingdom (72.1%), France (63.9%) and the Scandinavian states: Finland (81.6%), Sweden (74.6%) and Denmark (74.5%)¹⁰.

Gross written premium per capita (2018, EUR) in relation to the insurance market growth rate (2016-2018, EUR)

Source: own study based on Eurostat, Insurance Europe, Swiss Re Institute

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 2019, this rate stood at 2.8%, whereas the Europe average was 4.8%. Even lower penetration rates were achieved in the insurance markets of Lithuania (2.0%), Latvia (2.8%), Estonia (1.8%) and Ukraine (1.5%). The highest penetration rates were recorded by the United Kingdom (10.3%), Denmark (10.7%), Finland (10.2%) as well as the Netherlands (9.2%)¹¹.

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.

Penetration of insurance in relation to GDP per capita in Europe (2019, EUR)

Source: own study based on Eurostat, Swiss Re Institute, Deloitte

^{1 2} Swiss Re, sigma 4/2020: World insurance: riding out the 2020 pandemic

^{3 4 5} Insurance Europe, https://insuranceeurope.eu/insurancedata

⁶ KNF, Annual bulletin. Insurance market 2019, updated on 6 November 2020

⁷ Swiss Re, sigma 4/2020: World insurance: riding out the 2020 pandemic

⁸ KNF, Annual bulletin. Insurance market 2019, updated on 6 November 2020

⁹ Deloitte, CEE Insurance M&A Outlook, data aktualizacji październik 2019

^{10 11} Swiss Re, sigma 4/2020: World insurance: riding out the 2020 pandemic