Krystian Wiercioch, Deputy Chair of the KNF, delivered opening remarks at the 12th Congress of the Polish Chamber of Insurance (PIU).

See the full text of the address below.

Ladies and gentlemen

I would like to give my warm thank-you to the organisers for inviting me to the 12th Congress of the Polish Chamber of Insurance. I am glad to have an opportunity to take the floor once again and share with you the KNF’s perspective on today’s most relevant challenges and topics that shape the insurance sector. I am pleased to see that my colleagues have been invited to participate in discussion panels, where they will be able to present their position on key issues relevant to the industry.

The theme of this year’s conference is competitiveness. I firmly believe that the quality and effectiveness of supervision have a fundamental influence on the competitiveness of the insurance sector in Poland. In my speech, I’m going to present the KNF’s activities which, in my view, support  the development of a competitive market by ensuring that all entities operating in the Polish market are subject to uniform, transparent requirements and high standards.

I’m also going to share with you information about the key areas we are now focusing on which will soon have a material influence on the functioning and development of the insurance sector.

KNF’s tasks in the area of competitiveness

The KNF plays a key role in ensuring proper functioning of the financial market in Poland. The KNF’s main tasks include not only to supervise the stability, security and transparency of the market but also to actively support its development and competitiveness.

In regard to competitiveness, the KNF takes actions aimed at creating conditions for a healthy competition among market participants and promoting best practices and standards which improve the quality of services and increase customers’ trust. 

With those actions, the KNF not only protects the interests of market participants but also creates an environment that fosters innovation and development, which in turn is indispensable for a modern and competitive financial market in Poland.

Competitiveness of the Polish market 

First of all, let’s answer the question: is the Polish insurance market really competitive?

If we look at domestic insurance undertakings operating in the market, the number of 47 competing entities may seem relatively small. It’s worth emphasising that in the last ten years that number has decreased by 12 due to consolidation.

Since Poland joined the European Union in 2004, our country has become an integral part of the European single market of services, including insurance services. At the end of 2024, 591 foreign entities had the right to conduct insurance business in Poland under the freedom to provide services  and 24 through a branch. Although in practice, one third of those entities engage in business actively, one could say that the level of competition in the Polish market is high.

As a member of the European Union, Poland is subject to uniform requirements that aim to ensure consistency and high standards across the Community. Despite deep harmonisation at the EU level, the specific nature of the Polish market causes many areas to remain beyond full EU harmonisation, for example insurance contracts and the claim adjustment process. The specificity also stems from historical conditions, customers’ habits, and solutions developed in Poland prior to the EU accession.

As a result, the Polish market is characterised by additional mechanisms and standards shaped by court rulings (including resolutions of the Supreme Court), the supervisory policy of the KNF, as well as numerous industry-led initiatives.

Those complementary standards are important for preserving competition in the Polish insurance market. They enable effective elimination of harmful practices and entities that could destabilise the market through their short-term actions taking advantage of the possibility of postponing the payment of compensation in relation to the acceptance of premiums, being an option typical of insurance.

This is how the Polish insurance market builds its competitiveness not only with the number of entities, but mostly with the quality, stability and responsibility of market participants.

Competitiveness based on standards

The KNF plays an active role in shaping the insurance market by developing and promoting best practices and standards. Our aim is not only to supervise but also to support the insurance sector in establishing high standards and initiating self-regulation, which both improve the quality of services and build the trust of all market participants.

In the process of creating them, we are guided by the principle of finding a compromise among all key stakeholders – the insurance industry, distributors and customer representatives, as well as other entities operating in the insurance market.

We are aware that the interests of different groups are often divergent and the solutions they propose are diverse and sometimes contradictory. This is why we carefully review opinions and feedback, so that the final solution is not only comprehensible  but mainly facilitates a stable and safe development of the insurance market in Poland.

Our other priority is to mitigate the risks that might negatively affect the financial standing of insurance undertakings: solvency is the foundation of confidence in the whole insurance system. Let’s not forget that the primary goal of insurance business is to provide effective protection to the insured, that is those who rely on  insurance undertakings in order to gain tranquillity and security.

In the context of market competitiveness, we recognise and support the need to simplify and reduce existing regulations in order to increase the efficiency of the insurance sector and improve the availability of services to customers. The process must be carried out with utmost caution, though, because any precipitated decision to remove certain standards and requirements may result in regulatory gaps, lower quality of services, and – consequently – market destabilisation.

It is therefore crucial to balance deregulation with the need to maintain appropriate safeguards and transparency. Only such a responsible approach will allow to build a competitive, innovative and, above all, safe insurance market.

Competitiveness – compliance with rules, requirements and standards

The fundamental role of the KNF in ensuring an appropriate level of competition in the insurance market is to enforce compliance with applicable rules and standards continually and consistently. The key is to eliminate ‘skirmishers’ – entities with malevolent intentions which tend to disrupt the proper functioning of the whole or any part of the insurance market in Poland. Without the certainty that all entities operating in the Polish market are subject to the same rules, we cannot talk about real, healthy competition.

As regards domestic insurance undertakings, we have detailed up-to-date information about their financial standing, development strategy and solvency status. Unfortunately, we do not have similar direct access to data on foreign insurance undertakings. Relying on dispersed data sources, this year we are implementing limited monitoring of the level, directions of development and solvency status of these entities as well. We pay special attention to entities operating substantially, or offering products, in lines of business I would call socially sensitive.

Identification of irregularities is particularly important in the insurance business segments where the aggrieved party has not entered into a contract with an insurance undertaking directly; an example would be motor third-party liability insurance contracts or insurance guarantee contracts. Fast detection of irregularities allows taking supervisory corrective measures. For domestic entities, such measures are carried out mostly as part of bilateral cooperation or a formal process of issuing and enforcing recommendations, and – as a last resort – through sanctions, including withdrawal of authorisation to pursue the business.

For foreign entities, the process is more complex and lengthier, as the measures are generally taken through the competent supervisory authorities in the home country of the entity concerned. In addition to available ‘soft’ supervisory measures, in extraordinary circumstances, it is possible to apply direct measures, for example issue recommendations regarding the non-financial sphere or, in extreme and urgent cases, issue a ban on pursing the business in Poland. The ban is the ultimate, most severe tool in the supervisory toolbox available, but we do not hesitate to use it if necessary. 

All those measures, both towards domestic and foreign entities, are applied on a daily basis, often as low-profile activities, without the blaze of publicity. Information about actual decisions is published only in exceptional cases. 

The KNF’s activities in this area aim to ensure that all entities in the Polish insurance market operate on a level playing field, being the foundation of a fair and healthy competition, conducive to the stability and development of the whole sector.

Competitiveness – development strategies

The experiences from recent years, especially those related to flood and other natural disasters, clearly show that the insurance gap in Poland is a relevant issue. The scale of property underinsurance is a serious challenge, but at the same time it opens up huge opportunities for the development of the insurance sector.

Once and for all we need to stop thinking about insurance as products that must, first and foremost, be cheap. Cheap insurance is an illusion of security which in fact can turn out very expensive when damage occurs. Insurance cannot be a gimcrack! Its primary function is to provide real, effective protection, commensurate with the level of risk and potential losses, for fair, properly priced premiums.

High compensation is not a problem but actually a proof of the effectiveness of the insurance system. The higher the compensation, the greater the confidence of customers in insurance and their willingness to enter into contracts. At the same time, higher compensation means higher premium revenues; this is a natural and necessary relationship that guarantees the sector’s financial stability.

Competition in the insurance market should not therefore consist only in reducing the prices to the limits of profitability. Customers should choose insurance based on the quality of customer service, the comprehensiveness of assistance in emergency situations, the innovativeness of solutions applied, and the level of tailoring to the customer’s needs. The key task here is to raise the awareness that insurance is an investment in security, not an expense that should minimised in any way possible.

KNF’s plans and priorities

Finally, I would like to introduce you to the areas we are currently working on and our plans for the near future:

• We continue the assessment of premium adequacy in each class of insurance. As you know, in 2024 the market as a whole incurred a loss in class 10. This does not mean, however, that all insurance undertakings incurred losses; some of them generated profits. We engage in dialogue with selected entities and we monitor the implementation of recovery measures. We also do not exclude further disciplinary sanctions in case the corrective measures are not implemented with satisfactory results or if their implementation is delayed. It is worth emphasising that the initiatives are starting to bring the intended results: based on preliminary data for the first quarter, today I can say that the technical result of the entire sector in class 10 is already positive. We will soon see if this is just a temporary improvement or a long-term tendency. 
• We are now assessing the materiality of climate risk and the impact of cyber risk on insurers’ business and solvency. We carry out such assessment as part of annual stress tests and we consult market participants about the stress test scenarios.
• We hold a wide-ranging consultation on a draft recommendation on insurance distribution. The deadline for the submission of comments is 26 May 2025. The consultation process will continue over next months, so we’re going to engage in deeper dialogue with stakeholders. We want to share our motivations for adopting certain solutions, understand each comment and concern and, as appropriate, make the necessary adjustments to the text of the proposal. The purpose is to create a document which will not only help eliminate the irregularities we’ve identified but also support a safe and stable development of the insurance market in Poland.
• We continue our activities to identify the insurance gap in various product segments and reasons for its occurrence. Once these analyses are completed, we will share our insights in order to work together on the strategies for any further action.
• We review the insurance products offered by selected insurance undertakings through the banking sector entities in terms of whether such products offer the minimum value for the customer.
• In regard to the implementation of the IRRD and the revision of the Solvency II Directive, we cooperate closely with the Ministry of Finance. In our work, we will be putting special emphasis on a proper adaptation of the regulations to the specificity of the Polish market and on the clarification of the existing provisions pertaining to the restructuring, insolvency and guarantee system processes, so that they do not raise any interpretative doubt when they need to be used.
• Responding to one of the demands expressed by the Polish Chamber of Insurance after last year’s Congress, we have established cooperation with the Ministry of Justice. The purpose of that cooperation is to come up with a legislative proposal to standardise the amounts of compensation for death in car accidents. The topic was taken up by the Civil Law Codification Commission, and the established working team, with which we actively cooperate, builds on the work of the Redress Forum. We hope that this time the initiative will be successful and lead to the finalisation of a comprehensive legislative proposal.

Conclusion 

With a broad representation of the supervisory authority during this Congress we would like to emphasise our openness to dialogue with you on all matters relevant to the insurance industry. We encourage you to use the time of the conference not only during the discussion panels but also during coffee breaks and in a less formal atmosphere during evening meetings and dinners.

I invite you to listen to my colleagues’ speeches. In the debate on regulatory competitiveness, you will have the opportunity to listen to Prof. Jacek Jastrzębski, Chair of the KNF. Maciej Podlewski, Director of the UKNF’s Insurance Governance and Distribution Supervision, is going to discuss the facts and myths regarding flood. At the end of today’s programme, Daria Ringwelska, Deputy Director of the Insurance Supervision Department, is to talk about the resilience of the economy against natural disasters.

I would also like to congratulate the Polish Chamber of Insurance on the 35th anniversary of its foundation. This anniversary is a confirmation of the solid position of the Chamber in the insurance sector. I wish the Polish Chamber of Insurance further growth, unstoppable success, and constructive cooperation for the stability and innovativeness of the insurance market.

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