The Polish Financial Supervision Authority fined the insurer. Third party liability insurance premiums were too low
The Polish Financial Supervision Authority found the third party liability insurance premiums for motor vehicle owners offered by Agro Ubezpieczenia Towarzystwo Ubezpieczeń Wzajemnych to be inadequate and therefore imposed a fine of PLN 1.3 million on the insurer, the Polish Financial Supervision Authority announced on Wednesday.
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The insurer may request the Commission to reconsider the case or file a complaint against this decision to the Provincial Administrative Court in Warsaw.
The Polish Financial Supervision Authority emphasizes that the adequacy of contributions is of key importance for the financial stability of companies and the safety of the insured. Long-term lowering of premiums, especially in conditions of intense price competition, may lead to the inability to adequately cover future compensation and benefits and, consequently, to the risk of compromising the solvency of the insurance company and the stability of the entire market.
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“Inadequate third-party liability insurance premiums.” Why shouldn't the insurer lower premiums? The Polish Financial Supervision Authority explains
According to the findings of the Polish Financial Supervision Authority, in the years 2022-2024 the level of premiums did not ensure at least the fulfillment of all obligations under insurance contracts and the coverage of the costs of performing the insurance activities of the insurance company. This is class 10 insurance, which covers civil liability insurance for motor vehicle owners.
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“Lowering premiums often leads to their sharp increase in subsequent periods, when insurance companies are forced to quickly rebuild their profitability and capital position. Such sudden increases in premiums are unfavorable for customers, make planning insurance coverage more difficult and may limit the availability of insurance,” reads the KNF press release.
When determining the amount of contributions, companies should take into account not only historical data, but also, above all, projected future costs of servicing benefits. Omitting key factors may lead to incorrect risk valuation.
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Source: Polish Financial Supervision Authority, PAP
