Unit-Linked business in
Poland - A success story?
Stefanie Sperber, Teamleader
Northern Eastern Europe
Unit-Linked business in Poland - A success story?
1
Introduction
2
Milesstones of development
3
Challenges
4
Conclusion
2
Introduction | Milesstones of development | Challenges | Conclusion
Unit Linked – a success story?
 Unit-linked life insurance is a combination of risk cover and investment
(endowment) where the policyholder bears the investment risk.
 The portion of the premiums after deduction of all expenses and the premium
for the risk cover is allocated to unit funds.
 Investment returns may or may not be guaranteed
3
Introduction | Milesstones of development | Challenges | Conclusion
Development of Unit-Linked Premium in Poland compared to France
Source: CEA, KNF (Financial Supervision Authority in Poland)
4
Unit-Linked business in Poland - A success story?
1
Introduction
2
Milesstones of development
3
Challenges
4
Conclusion
5
Introduction | Milesstones of development | Challenges | Conclusion
Milestones of the development of Unit-Linked business in Poland
First UL product
was introduced
from
Commercial
Union
Followed by
PZU Life and
Amplico Life
1993
New regulation
of
bancassurance
approach
Tighten of
information
requirements to
be delivered to
the customer
Introduction of tax
rate (19 %) on
capital income
(competitive
advantage for UL
policies as they
are only taxed
once at the end of
the policy)
1999
Change in
legislation
which firstly
introduced
investment in
external funds/
Pension reform
2004
2008
2013
Financial crisis;
concerns of
consumers
regarding this
product
commenced
6
Introduction | Milesstones of development | Challenges | Conclusion
Distribution Channels: Key factor for a positive UL development
Source: CEA
7
Introduction | Milesstones of development | Challenges | Conclusion
Bancassurance channel: High importance of Unit-Linked business
 In 2012 Unit-Linked policies
constituted 88 % of the
premium acquired in the
bancassurance channel by
insurance companies
 Average amount of
premium spent for UL was
in 2012 around PLN 25 000
(EUR 6 250) per year
 In 2012 investment policies
had only a share of 8 % of
the total number of policies
sold
Source: PIU; bancassurance report 2 Q 2013
8
Introduction | Milesstones of development | Challenges | Conclusion
Some facts about Unit-linked business in the Polish market in 2012
 Total premium volume of Unit-linked amounted to 3bn EUR (+14,3 % of 2011)
 Distribution channel
 Mainly sold via bancassurance channel
 Single/regular payment (49,6 %/50,4 %)
 Individual policies/ Group policies (59 %/41% of total premium)
 Group Employee Pension Programme (PPE) (Pillar III – Poland; Pillar II - EU)
 Employers are responsible for creating this type of programme in the company
 Max. 7 % on gross remuneration (additional fee – paid by employee - is possible)
 Money saved in PPE is free of tax from capital profits
 Not yet very popular (3 % of total UL premium)=> Current discussion about the
system – higher importance in the future is requested
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Introduction | Milesstones of development | Challenges | Conclusion
Key factors of successful providers
Strong
bancassurance
or broker
channel
Successful
yield history
in key funds
Flexible IT
Factors
for
success
Large
choice of
funds with
flexibility in
fund
management
Guarantees
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Unit Linked business in Poland - A success story?
1
Introduction
2
Milesstones of development
3
Challenges
4
Conclusion
11
Introduction | Milesstones of development | Challenges | Conclusion
Challenges in order to maintain interest of customers towards Unit-Linked
Misselling
High level
of fees
Transparency
European
Parliament is
working on
regulations
regarding
information to
clients purchasing
any investment
product (PRIPs)
Consumer
Protection
12
Introduction | Milesstones of development | Challenges | Conclusion
The Polish solution is 1) an unified information for all unit linked policies
Valid as of 01.04.2014
Recommendation
from PIU
Introduction is
planned
earlier than in
the EU
Regulations are
stricter than
required by EU
legislation
(PRIPs)
Product Data
Sheet
consists of
Data sheet to be
provided as
information before
signature
Fees connected to
service – identical
structure for all
insurers
Unified and simple
information to
enable comparison
between products
Level of risk
connected with an
investment
Unacceptable to use
any marketing
jargon or insurance
terminology
Three variants on
insurance simulation
(regular, reduced
and increased
profitability)
Except one all
insurance
companies
agreed
13
Introduction | Milesstones of development | Challenges | Conclusion
The Polish solution is 2) good practice for the bancassurance market
Valid as of 01.01.2013
Recommendation
Recommendations of
PIU only!
Disclosure
obligations to the
customer
Information to be
provided in a
transparent and
clear manner
Information whether
bank acts in the
capacity of the
insurer or
intermediary
Unified and simple
information to
enable comparison
between products
Costs incurred for
customer including
method of
calculation
Obligation for bank
to check fulfilment of
requirements for the
cover and explain
risk for opting out
Possibility of
occurrence of risk
associated with
particular investment
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Unit Linked business in Poland - A success story?
1
Introduction
2
Milesstones of development
3
Challenges
4
Conclusion
15
Introduction | Milesstones of development | Challenges | Conclusion
Conclusion and “lessons learned” from the Polish market
Unit linked premium has been recovering and
developing in a very positive way after the crisis
33 % of life premium acquired in Poland is related
to Unit-Linked
Strong bancassurance channel is a key factor of
successful distribution (88 % is UL)
Simplified information and transparency is a key
issue for customer satisfaction
Tax advantages under discussion for the pension
business can further push the development
16
Introduction | Milesstones of development | Challenges | Conclusion
Unit Linked – a success story?
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Introduction | Milesstones of development | Challenges | Conclusion
DISCLAIMER
“The information provided in this presentation does in no way whatsoever constitute legal, accounting,
tax or other professional advice by SCOR SE and its affiliated companies SCOR Global P&C SE and
SCOR GLOBAL LIFE SE (“SCOR”). While SCOR has endeavoured to include in this presentation
information it believes to be reliable, complete and up-to-date, the company does not make any
representation or warranty, express or implied, as to the accuracy, completeness or updated status of
such information.
Therefore, in no case whatsoever will SCOR be liable to anyone for any decision made or action taken in
conjunction with the information in this presentation or for any related damages.”
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Unit Linked business in Poland - A success story? - Insur