| Key cost ratios in non-life insurance | 1 January – 31 December 2022 |
1 January – 31 December 2021 |
|---|---|---|
| Expense ratio | 27,67% | 27,33% |
| Net loss ratio | 61,12% | 61,15% |
| Reinsurer’s retention ratio | 9,45% | 8,06% |
| Combined ratio | 88,79% | 88,48% |
The expense ratio is the ratio of total acquisition expenses, administrative expenses, reinsurance commissions and profit participation, to the net earned premiums.
The net loss ratio is the ratio of claims and the net movement in technical provisions, to the net earned premiums.
The reinsurer’s retention ratio is the ratio of the reinsurer’s share in gross written premiums, to the gross written premiums.
The combined ratio is the ratio of the sum of acquisition expenses, administrative expenses, reinsurance commissions and profit participation, claims and net movement in technical provisions to the net earned premiums.
The following tables present the development of technical provisions and payments in successive reporting years.
| Claims development in direct non-life insurance, gross (by reporting year) | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|---|---|---|---|
| Provision at the end of the reporting period | 11 783 | 13 312 | 13 163 | 13 181 | 13 990 | 14 975 | 15 627 | 16 540 | 17 303 | 15 717 |
| Provision and total claim payments (from the end of the first reporting period to the end of the current reporting period, excluding payments made before the end of the first reporting period): | ||||||||||
| calculated 1 year later | 12 241 | 13 032 | 12 908 | 13 353 | 14 251 | 14 929 | 15 833 | 16 048 | 16 876 | |
| calculated 2 years later | 12 180 | 12 719 | 12 922 | 13 500 | 14 281 | 15 008 | 15 542 | 15 629 | ||
| calculated 3 years later | 12 080 | 12 822 | 13 135 | 13 518 | 14 438 | 14 839 | 15 286 | |||
| calculated 4 years later | 12 172 | 13 089 | 13 183 | 13 686 | 14 366 | 14 732 | ||||
| calculated 5 years later | 12 439 | 13 172 | 13 353 | 13 677 | 14 362 | |||||
| calculated 6 years later | 12 536 | 13 356 | 13 398 | 13 704 | ||||||
| calculated 7 years later | 12 713 | 13 406 | 13 446 | |||||||
| calculated 8 years later | 12 785 | 13 468 | ||||||||
| calculated 9 years later | 12 885 | |||||||||
| Sum total of the provision and total claim payments (from the end of the first reporting period to the end of the current reporting period, excluding payments made before the end of the first reporting period) | 12 885 | 13 468 | 13 446 | 13 704 | 14 362 | 14 732 | 15 286 | 15 629 | 16 876 | |
| Total claim payments (from the end of the first reporting period to the end of the current reporting period, excluding payments made before the end of the first reporting period) | 7 884 | 7 985 | 7 536 | 7 187 | 6 981 | 6 344 | 5 409 | 4 034 | 3 032 | |
| Provision recognized in the statement of financial position | 5 001 | 5 483 | 5 910 | 6 517 | 7 381 | 8 388 | 9 877 | 11 595 | 13 844 | |
| Difference between the provision at the end of the first year and the provision estimated at the end of the reporting period (run-off result) | -1 102 | -156 | -283 | -523 | -372 | 243 | 341 | 911 | 427 | |
| The above difference as % of provision at the end of the first year | -9% | -1% | -2% | -4% | -3% | 2% | 2% | 6% | 2% | |
| Claims development in direct non-life insurance, net of reinsurance (by reporting year) | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|---|---|---|---|
| Provision at the end of the reporting period | 11 453 | 12 814 | 12 653 | 12 559 | 12 880 | 13 484 | 13 933 | 14 545 | 15 053 | 15 717 |
| Provision and total claim payments (from the end of the first reporting period to the end of the current reporting period, excluding payments made before the end of the first reporting period): | ||||||||||
| calculated 1 year later | 11 787 | 12 525 | 12 355 | 12 576 | 13 066 | 13 362 | 13 952 | 14 089 | 14 648 | |
| calculated 2 years later | 11 704 | 12 201 | 12 278 | 12 664 | 13 005 | 13 393 | 13 646 | 13 695 | ||
| calculated 3 years later | 11 599 | 12 224 | 12 473 | 12 615 | 13 112 | 13 227 | 13 383 | |||
| calculated 4 years later | 11 642 | 12 481 | 12 463 | 12 758 | 13 048 | 13 099 | ||||
| calculated 5 years later | 11 891 | 12 515 | 12 623 | 12 781 | 13 012 | |||||
| calculated 6 years later | 11 938 | 12 688 | 12 679 | 12 791 | ||||||
| calculated 7 years later | 12 109 | 12 750 | 12 711 | |||||||
| calculated 8 years later | 12 198 | 12 813 | ||||||||
| calculated 9 years later | 12 294 | |||||||||
| Sum total of the provision and total claim payments (from the end of the first reporting period to the end of the current reporting period, excluding payments made before the end of the first reporting period) | 12 294 | 12 813 | 12 711 | 12 791 | 13 012 | 13 099 | 13 383 | 13 695 | 14 648 | |
| Total claim payments (from the end of the first reporting period to the end of the current reporting period, excluding payments made before the end of the first reporting period) | 7 576 | 7 678 | 7 202 | 6 752 | 6 311 | 5 564 | 4 739 | 3 466 | 2 564 | |
| Provision recognized in the statement of financial position | 4 718 | 5 135 | 5 509 | 6 039 | 6 701 | 7 535 | 8 644 | 10 229 | 12 084 | |
| Difference between the provision at the end of the first year and the provision estimated at the end of the reporting period (run-off result) | -841 | 1 | -58 | -232 | -132 | 385 | 550 | 850 | 405 | |
| The above difference as % of provision at the end of the first year | -7% | 0% | 0% | -2% | -1% | 3% | 4% | 6% | 3% | |
Motor insurance – motor own damage (autocasco) and motor TPL – is the core component of the PZU Group’s portfolio. Both types of insurance are generally concluded for one year, in which the loss must occur for the claim to be paid out. In the case of motor own damage, the time for reporting a loss is short and it is not the source of uncertainty. Motor TPL is a whole different situation – the period for reporting losses may be up to 30 years. The level of property losses is sensitive especially to the number of litigation claims reported and court rulings awarded in respective cases. In the case of TPL insurance contracts, new types of long-tail losses arise, which makes the process of estimating technical provisions much more complicated.
Risk concentration in non-life insurance
Within actuarial risk, the PZU Group identifies concentration risk with regard to possible losses caused by natural disasters, such as, in particular, floods and cyclones. The table below presents sums insured in the specified ranges, broken down by voivodeships (for operations conducted in Poland) and countries (for foreign operations). With regard to the exposure to the risk of floods and cyclones, the risk management system in the PZU Group allows to monitor it regularly and the reinsurance program in place reduces significantly the potential net catastrophic loss levels.
| Exposure to catastrophic losses in property insurance | Sum insured (PLN million) 31 December 2022 | Sum insured (PLN million) 31 December 2021 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 0 – 0.2 | 0,2 – 0.5 | 0.5 – 2 | 2 – 10 | 10 – 50 | over 50 | Sum | 0 – 0.2 | 0,2 – 0.5 | 0.5 – 2 | 2 – 10 | 10 – 50 | over 50 | Sum | |
| dolnośląskie | 0.6% | 1.2% | 1.4% | 0.5% | 0.4% | 1.7% | 5.8% | 0.8% | 1.4% | 1.4% | 0.5% | 0.4% | 2.0% | 6.5% |
| kujawsko – pomorskie | 0.5% | 0.7% | 0.6% | 0.3% | 0.3% | 1.1% | 3.5% | 0.5% | 0.7% | 0.6% | 0.3% | 0.2% | 1.1% | 3.4% |
| lubelskie | 0.4% | 0.6% | 0.3% | 0.1% | 0.1% | 1.1% | 2.6% | 0.5% | 0.7% | 0.3% | 0.1% | 0.1% | 1.6% | 3.3% |
| lubuskie | 0.2% | 0.3% | 0.3% | 0.1% | 0.1% | 0.5% | 1.5% | 0.2% | 0.3% | 0.2% | 0.1% | 0.1% | 0.5% | 1.4% |
| łódzkie | 0.6% | 1.0% | 0.8% | 0.3% | 0.2% | 3.5% | 6.4% | 0.6% | 1.0% | 0.7% | 0.3% | 0.2% | 3,9% | 6.7% |
| małopolskie | 0.6% | 1.4% | 1.1% | 0.4% | 0.4% | 1.6% | 5.5% | 0.7% | 1.5% | 1.0% | 0.4% | 0.4% | 1.4% | 5.4% |
| mazowieckie | 1.6% | 3.1% | 2.8% | 0.9% | 1.1% | 9.7% | 19.2% | 1,6% | 3,1% | 2,6% | 0,9% | 1,0% | 9,1% | 18.3% |
| opolskie | 0.2% | 0.4% | 0.3% | 0.1% | 0.1% | 0.6% | 1.7% | 0,2% | 0.4% | 0.3% | 0.1% | 0.1% | 1.6% | 2.7% |
| podkarpackie | 0.4% | 0.8% | 0.4% | 0.2% | 0.2% | 1.4% | 3.4% | 0.8% | 1.1% | 0.4% | 0.2% | 0.1% | 1.4% | 4.0% |
| podlaskie | 0.3% | 0.4% | 0.3% | 0.2% | 0.2% | 0.5% | 1.9% | 0.3% | 0.4% | 0.3% | 0.2% | 0.2% | 0.4% | 1.8% |
| pomorskie | 0.5% | 1.0% | 1.0% | 0.5% | 0.6% | 5.8% | 9.4% | 0.5% | 1.0% | 0.9% | 0.5% | 0.5% | 4.8% | 8.2% |
| śląskie | 0.9% | 1.5% | 1.4% | 0.5% | 1.5% | 3.7% | 9.5% | 1.0% | 1.5% | 1.2% | 0.5% | 1.2% | 3.9% | 9.3% |
| świętokrzyskie | 0.3% | 0.4% | 0.2% | 0.1% | 0.1% | 0.4% | 1.5% | 0.3% | 0.5% | 0.2% | 0.1% | 0.1% | 0.6% | 1.8% |
| warmińsko-mazurskie | 0.3% | 0.4% | 0.4% | 0.2% | 0.1% | 0.5% | 1.9% | 0.3% | 0.5% | 0.3% | 0.2% | 0.1% | 1.2% | 2.6% |
| wielkopolskie | 1.0% | 1.8% | 1.6% | 0.7% | 0.6% | 2.6% | 8.3% | 1.0% | 1.8% | 1.4% | 0.6% | 0.5% | 2.4% | 7.7% |
| zachodnio-pomorskie | 0.3% | 0.5% | 0.5% | 0.4% | 0.4% | 1.5% | 3.6% | 0.3% | 0.5% | 0.5% | 0.4% | 0.3% | 2.2% | 4.2% |
| Lithuania and Estonia | 0.4% | 2.2% | 3.1% | 1.1% | 1.0% | 2.0% | 9.8% | 0.6% | 1.8% | 2.5% | 0.8% | 1.0% | 2.1% | 8.8% |
| Latvia | 0.1% | 0.5% | 1.1% | 0.5% | 0.5% | 0.5% | 3.2% | 0.1% | 0.6% | 0,8% | 0.4% | 0.4% | 0.6% | 2.9% |
| Ukraine | 0.0% | 0.0% | 0.0% | 0.1% | 0.2% | 0.6% | 0.9% | 0.0% | 0.0% | 0.0% | 0.1% | 0.1% | 0.6% | 0.8% |
| Norway | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.4% | 0.4% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.2% | 0.2% |
| Total | 9.2% | 18.2% | 17.6% | 7.2% | 8.1% | 39.7% | 100.0% | 10.3% | 18.8% | 15.6% | 6.7% | 7.0% | 41.6% | 100.0% |
Capitalized annuities
The following results do not take into account the impact of changes in valuation of investments included in provision calculations.
| Impact of the change in assumptions regarding the provision for the capitalized value of annuities in non-life insurance on the net financial result and equity | 31 December 2022 | 31 December 2021 | ||
|---|---|---|---|---|
| gross | net base | gross | net base | |
| Technical rate – increased by 0.5 p.p. | 509 | 474 | 457 | 425 |
| Technical rate – decrease by 1.0 p.p. | -1 308 | -1 221 | -1 173 | -1 090 |
| Mortality at 110% of currently assumed rate | 156 | 149 | 139 | 134 |
| Mortality at 90% of currently assumed rate | -175 | -166 | -157 | -149 |