April 2009

Over the last week, we’ve had many interesting pieces of news from the insurance industry. Some of them focused on new facilities aimed at convincing customers to choose one specific offer over others (Ergo Hestia, Liberty Direct). The new opportunities to choose policy suppliers (from foreign providers and through internet comparison sites) were also covered extensively.


Go west for your insurance 

On Wednesday, we were surprised with many press releases related to the insurance market. The news on another internet price comparison tool, specializing in car insurance policies - rankomat.pl – was definitely worth reviewing.
What is interesting, the day was not over with that single launch. The industry was furthermore confronted with news of a car fleet management company, Arval, starting sales of Auto Casco policies through Greenwal Insurance, a provider created by the company. Both providers (based in Ireland) operate on the Polish market utilizing the EU principle of free flow of services. We can only assume that Poles who are always fast to learn how to calculate outlays and benefits will soon start to utilize offers by foreign financial institutions. The products are already here, obstacles such as lack of expertise with regard to foreign legal systems and foreign languages are also diseppearing – with unification of EU law proving to be a benefit here. Policy prices might constitute a barrier, but many Poles are already both earning enough and feeling at home with the Old Continent, which means they can afford foreign insurance policies.
A session of the Financial Supervision Commission was also held on Wednesday, taking several decisions bearing on the insurance market. The Commision agreed to appoint Aniela Schreyner as the CEO and Janusz Szulik as a Board Member of the TU Inter-Życie Polska, showed a green light to Aviva growing shares in CU TUO and CU Życie as well as punished Pocztowe TUW with PLN 10k fine for delays in paying out compensations from car insurance policies.
Other news included a launch of two new “structurized” products for ING Bank Śląski clients (the Investment Insurance Plan “I bet on raw materials” and the Investment Time Deposite- ILT WIG20), issue of Europeans’ winter travels ranking by Mondial Assistance and announcement of Commercial Union changing its name to Aviva effective on 1 June this year.

The Polish market holds on well, foreign markets – not so good

Just like Wednesday, the next day brought about interesting news. Ergo Hestia, active in implementing web-based solutions to facilitate customer service, decided to pol its users on the eKonto service. The assessment went well.
We also learned on Thursday that the dispute between MSP and Eureko as to PZU management might soon come to a halt. The government department head, Aleksander Grad, signalled that an agreement with the Dutch might be reached in late May or early June. No details of the memorandum as negotiaded by the parties were released, but one might well imagine the talks going on really smoothly until the moment when financial issues are touched upon. Even though... Eureko is not in its prime when we are talking about finance, and this never supports one’s negotiating position. We shall probably learn more once the talks commence.
The news on Liberty Direct sales network expansion by adding regional insurance consultants was a surprise. Has the direct segment slowed down that much? The declaration by Aviva Europa CEO on no Polish companies from the group being intended for sale was not unexpected, on the other hand. Commercial Union is one of few market leaders, thus the price of potential transaction wouldn’t be low. Why sell then? Noone was surprised by news on huge interest and purchase levels on D&O policies, either. Crisis works this way, you know.
The international news section cannot have ommited inforation on AIG trouble. This time those touched on a “family silverware” item – an airplane leasing company, International Lease Finance Corp., that is in urgent need of financing and thus applied to Fed to receive 5 billion dollars in credit. Trying to alleviate the bad impression this made, AIG notified that AlU (its asset branch) was announced as the “Best worldwide insurance provider” in a competition organized by Euromoney (with an honorable mention going to the Polish branch of AlG Europe).
Allianz scored gold in another category of the competition. ING, on the other hand, announced the intent to strip off some assets (not in Poland, however), while Berkshire Hathaway had to swallow its reduced ratings (in particular with regard to its insurance business) as assigned by Moody's.

Interesting Good Friday

Surprisingly, Good Friday was not devoid of news. What is interesting, most of them were pretty optimistic (finally!) as to their character. The key items shall include the triumph of ations taken by the Citizens’ Legislative Initiative Committee RAZEM (TOGETHER) and details of the New Sales Era – program for agents operated by PZU.
The end of the week brought about one more important new item on personal changes on the Link4 CEO position: following Arkadiusz Lew-Kledrowski resignation, the position was taken by Adam Horosz. This personal switch did not surprise the market, however. Right after RSA became new owner of the insurance provider one could have assumed there was no way for no changes to Link4 senior management. This is a law governing major shareholding changes.
Other Friday news include notification on insurance providers’ preventive actions taken to lower risks of fradulent claims and summing up last year’s results in Inter Partner Assistance Polska.

In Italy just like in Poland

The first business day following Easter usually does not bring about many releases. This year the situation was much the same. However, there was a real gem in the news on Tuesday – estimates related to civil liability vehicle insurance compensations for suffering due to loss of relatives in car accidents. The cap on sums paid out (at a level of 30k PLN) is in line with analysts’ expectations. The insurance providers are afraid that courts may multiply the value of adjudicated compensations, but it can be assumed that the juries might turn to more individual treatment of each case as those are quite delicate. Furthermore, courts are likely to mirror insurance providers’ actions who base their decisions not only on doctors’ statements, but also on tax returns (to assess psychological condition as marked by earning power decrease sustained by claimants). The largest beneficiaries, then, will be lawyers and psychology/psychiatry experts.
International: the earthquake that shattered the L'Aquila region at the beginning of April is unlikely to shatter Italian insurance providers’ wallets. According to Italian insurance supervision authorities, assets in the ruined region were characterized by low level of insurance coverage due to reasoning along the lines of “if a catastrophy happens, the authorities will help us anyway”.
I wonder if anybody has interesting parallesls between this mode of thinking and another nation?
In Italy just like in Poland.
It is probable that next week will bring about data on radical mood upswing on the financial markets. American companies that have already published their Q1 data did not include insurance providers yet, but there were many representatives from other financial sector industries who conluded the quarter with surprisingly good results.
Perhaps it is the first clear indicator of the crisis starting to become history?

Artur Makowiecki
news@gu.com.pl