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Operating model


Life insurance (PZU Życie)

PZU AR 2020 > Market and business > Business model > Life insurance (PZU Życie)
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Market situation

After three quarters of 2020, the life insurance market in Poland, measured by gross written premium, was worth PLN 15,395 million, meaning that over the most recent 5 years it contracted on average by 3.6% per annum. At the same time, the premiums collected during the three quarters were 3.1% lower than those in the corresponding period of 2019. This resulted principally from the evolution in the single premium business in investment products. Gross written premium in periodic premium products has increased both in life insurance (class I) and in accident and illness insurance (class V).

Gross written premium* reported by life insurers in Poland (in PLN million)

* based on tables „Technical Account of Life Insurance Companies by Insurance Classes” 

Source: KNF, Quarterly Newsletter. Rynek ubezpieczeń [Insurance market] 3/2020, Rynek ubezpieczeń 3/2019, Rynek ubezpieczeń 3/2018, Rynek ubezpieczeń 3/2017, Rynek ubezpieczeń 3/2016

The changes in the level and the growth rate of the life insurance market premium in recent years have been stimulated mostly by single premiums in investment products. Similarly, the premium contraction for the overall market year on year pertained to single premiums (down PLN 825 million, i.e. -24.1% y/y, compared to -17.0% in the previous year). The changes in circumstances on the capital market and in the legal environment should be considered to be the underlying causes for the gross written premium on single premium business to fall in a trend over several years. The low interest rates and the tax on short-term endowment insurance products with fixed or index-based rates of return, which was introduced in 2015, contributed to the declining interest in those investment products and caused them to be gradually withdrawn from offer (mainly the fixed rate products). In subsequent years the guidelines of the regulatory authority, including those regulating the level of fees charged to clients of unit-linked products, as well as EU directives regulating the market for unit-linked products and their distribution led to insurance undertakings constricting their offering of these types of products, especially in cooperation with banks. After three quarters of 2018, the first sudden decline in single premiums was recorded (-31.7% y/y, of which -41.3% in the area of investment products) which was followed by downward movements in subsequent years (-24.1% after three quarters of 2020).

The outcome of this market evolution was the expanding significance of periodic premium that constitutes PZU Życie’s competitive edge on the market. During the three quarters of 2020, premium with this payment form was 2.6% higher compared to the same period in 2019, with a cumulative average growth rate of 1.1% for the last 5 years. Despite the declining periodic premium in unit-linked life insurance (by PLN 197 million y/y), the premium in protection products in classes I and V continues to trend upward (PLN +511 million y/y), in both group products (PLN +170 million y/y) and individually purchased insurance (up by PLN 117 million y/y).

At the same time, market concentration measured by the periodic gross written premium remained high. During the last year, the sequence of the four largest market players has not changed and their combined share rose to 71.2%.

The total technical result generated by life insurers in Q1-Q3 2020 was up PLN 176 million (+6.9% y/y) from the corresponding period of 2019 to PLN 2,718 million. An increase occurred only in the accident and illness insurance class (class V) – by PLN 352 million (+24.1% y/y). It resulted from an increase in net earned premium with a simultaneous decline in claims and benefits (the impact of temporary social isolation due to the pandemic and therefore lower accessibility of medical services).

In this same period, life insurers generated a net result of PLN 2,175 million, representing a PLN 114 million (5.5%) increase y/y. This is the effect of the technical result being better than in the corresponding period of 2019, with a simultaneous unfavorable impact of investment performance realized on insurers’ free funds.

The total value of the investments made by life insurers at the end of Q3 2020 was PLN 42,259 million, signifying a 4.8% growth compared to the end of 2019. However, the high level of claims paid out, which exceeded the level of contributions to funds led to a lower net asset value of life insurance in which the policyholder bears the investment risk (down 5.9% to PLN 46,141 million).

PZU Życie’s activity

Within the PZU Group, PZU Życie operates on the Polish life insurance market. The company offers an extensive range of life insurance products, which for management purposes are reported and analyzed broken down into the following three segments: 

  • group and individually continued insurance; 
  • individual insurance; 
  • investment contracts.

Life insurance market – gross written premium vs. technical result (in PLN m)

Life insurance market – gross written premium vs. technical result 1 January - 30 September 2019 1 January - 30 September 2020
PZU Życie Market Market net of PZU Życie PZU Życie Market Market net of PZU Życie
Gross written premium 6,351 15,887 9,536 6,519 15,395 8,875
Technical result 1,334 2,542 1,208 1,519 2,718 1,199
Profitability 21,0% 16,0% 12,7% 23,3% 17,7% 13,5%

Source: KNF ( Quarterly Bulletin. Rynek ubezpieczeń 3/2020, Rynek ubezpieczeń 3/2019, PZU Życie’s data

During Q1-Q3 2020, PZU Życie wrote 42.3% of the gross written premium of all life insurers on the market, signifying further growth on top of last year’s market share (2.4 p.p.). The reason for the increase is the higher level of single gross written premium than a year earlier (both among protection insurance products and investment insurance products) with a decrease in the share of other market participants (mainly in the unit-linked life insurance class).

At the same time, PZU Życie continued to be the leader in the periodic premium segment. the first three quarters of 2020, it generated 45.6% of these types of premiums, signifying a small decrease (by 0.3 p.p.) in the market share in this segment as compared to the previous year. The rate of increase in gross written premium at PZU Życie in this segment was 2% y/y, while the other market players taken together posted a 3.1% growth rate. One of the major factors was the rapid growth in the portfolio of health insurance (class V) and individual protection insurance (class I). PZU Życie had nearly 2.2 million health insurance policies in its portfolio.

PZU’s share in just the life insurance segment (class I) for periodic premiums at the end of Q3 2020 was 59.7% when measured by gross written premium and 64.2% when measured by the number of contracts in force. In turn, PZU’s market share in terms of the method of entering into an agreement just in the life insurance segment (group vs. individual) was 64.9% for group policies and 41.8% for individual policies (measured by gross written premium).

Life insurers – percentage of periodic gross written premium in Q1-Q3 2020 (in %)

Groups: Talanx - Warta, Europa, Open Life; VIG - Compensa, Vienna Life; Aviva - Aviva, Santander-Aviva

Source: KNF, Quarterly Newsletter. Rynek ubezpieczeń [Insurance Market] 3/2020

PZU Życie’s technical result represented more than half the result earned by all life insurance companies. This evidences the high profitability these products enjoy. PZU Życie’s technical result margin on gross written premium was 1.7 times higher than the overall margin generated by other companies offering life insurance (23.3% versus 13.5%).

Product offer

PZU Życie, as a popular and the largest insurer on the Polish market, continuously expands its offering by adding new products or modifying existing ones to protect its clients at each stage of their lives. The unique synergy of competences within the PZU Group (insurer, medical operator, investment manager) allows the company to comprehensively take care of life, health and savings of its clients, providing them with the broadest possible support in accordance with their expectations and needs.

The changes in the offering take into account the new requirements of the regulatory authority and the growing extent of statutory consumer protection. The changes are made not only to the product itself but also entail the modernization and simplification of the way in which insurance is offered and sold. They also enable the client to take advantage of various contact channels to reach the insurance undertaking (e.g. in a branch, by phone, e-mail, Internet client account, person providing technical insurance services in the workplace or through an insurance intermediary, whether tied or external).

Under group and health insurance, PZU Życie took the following actions in 2020: 

  • added a new insurance rider, “Child Cover”, to the offering of PZU Cover and Health and PZU Life Protection products. The rider includes three additional risks: critical illness (26 diseases), hospitalization as a result of an illness or accident, and the child’s health loss. The insurance covers children less than 18 years of age. Insurance riders are available in two variants which differ in the amount of the sum insured with the premium amount independent of the number of children covered. The insured has the option to decide on his or her own whether or not to extend the cover with a new rider (My Choice);
      • extended the P Plus group insurance offering with the following three new riders designed to provide insurance cover for children:
          • accidental dismemberment of a child, 
          • hospitalization of a child caused by an accident or illness, 
          • occurrence of a critical illness of a child (26 different diseases).

Each of these riders may be extended to include medical services, among others consultations with specialist physicians and rehabilitation;

  • introduced a pilot of the PZU Cover for Farmers product for natural persons who are owners and co-owners of an agricultural farm. Insurance cover may also include their spouses or life partners and adult children. The advantages of this offering include high benefits in the event of accidents and protection for additional risk, addressed only to this group of clients: i.e. death of the insured as a result of an accident at agricultural work. A client may choose from four options of the offering; 
  • launched an industry-specific offer in the PZU Cover and Health and PZU Life under Cover insurance. In this offer, clients may choose a non-standard sum insured and higher benefits for specific permanent dismemberments, which are more prevalent for people employed in specific industries. The scope, and even the graphic design, of each offer refers to the industry, for which it has been developed; 
  • extended the corporate insurance offering by adding new insurance riders against the loss of abilities in everyday life. It is the first product of this type on the Polish market. It ensures financial support if, as a result of illness or accident, the insured loses his/her ability or skill affecting the quality of his/her everyday life and work (such as e.g. sight, hearing, speech, walking, standing, sitting, bending). The key advantage of the PZU Życie’s offering over the products existing on the market, in terms of permanent inability to work and/or function independently is the lack of an obligation to present ZUS decisions on inability to work as well as simple and easy to understand definitions of impairment. The money received from insurance may provide assistance, for instance in rearranging the insured’s apartment or vehicle to the new requirements arising from his or her disability, hiring a rehabilitation specialist or home assistant, or settling current liabilities. In July 2020, a new insurance rider supplemented the PZU Cover and Health and PZU Life under Cover offer; 
  • launched sales of PZU Thinking about Life and Health product for companies employing up to 4 people. Employees may select from among 6 insurance options with different covers and benefit amounts. Each option may be extended to include private medical care. The insurance covers have been prepared to address different needs, depending on the client’s stage in life. Agreements are concluded remotely via the mojePZU portal. PZU Życie can insure even a single employee – also when an employer itself does not take out a cover;
  • supplemented the PZU Cover and Health and PZU Life under Cover offer to include riders for the insured’s spouse: hospital treatment, surgical operations and permanent dismemberment. The new riders extended the cover for spouses and enhanced the competitiveness of the whole offer; 
  • updated selected insurance riders for the P Plus group insurance (among others, critical illness of the insured/ spouse, specialist treatment). The changes involved mainly adaptation of the definition to the current medical knowledge and simplification of enrollment. In the specialist treatment rider the scope of covered medical procedures was extended (from 6 to 10), thus improving the competitiveness of the agreement.

PZU Życie’s efforts in the area of individual protection insurance and protection and unit-linked insurance

  • implemented pioneering insurance riders covering the loss of abilities in everyday life. The product, just like the new one offered in group and health insurance, ensures financial support if, as a result of illness or accident, the insured loses his/her abilities affecting the quality of his/her everyday life and work; 
  • modified the insurance rider covering death caused by a motor accident and introduction of a promotion under the name “Additional sums insured” The purpose of this campaign is to incentivize clients to purchase insurance riders offered under protection and unit-linked products. The campaign focuses on increasing the sum insured in the insurance rider selected by the client without charging an additional premium; 
  • introduced three insurance riders covering critical illness, hospital treatment and surgical operations, covering the largest in Poland list of critical illnesses. These products offer, among others, the possibility of multiple payout of the benefit and receipt of a pharmacy card after hospitalization, i.e. free medicines up to a specified limit. They also provide an additional benefit in the event of hospitalization in connection with a malignant neoplasm; 
  • supplemented the offer by adding the PZU Treatment abroad individual insurance, providing comprehensive organization of treatment in specialized medical centers abroad and covering its costs. The insurance covers:
      • development of a neoplasm, 
      • cardiac surgery, 
      • neurosurgical procedure, 
      • organ or bone marrow transplant;
  • introduced 5 new products offering insurance coverage for children. They provide for disbursement of a policy benefit in the event of critical illness, hospital treatment, surgical operation or accidental dismemberment of a child. They allow for treatment of the child abroad in specific situations, e.g. if they have a malignant neoplasm, if a cardio- or neurosurgical operation or transplantation is required. As part of the PZU child treatment abroad insurance, PZU arranges for the treatment and covers its costs up to as much as EUR 2 million;
  • expanded the individual insurance offer to also cover a spouse or partner, making it possible to take out a comprehensive insurance of the whole family under a single policy. Thanks to the joint policy the conclusion of the insurance agreement is simpler and all policy components can be paid for in a single premium.

Thanks to the new cover and the numerous changes introduced over the past dozen or so months, PZU’s individual life and health insurance offer has become one of the broadest and the most competitive in the Polish market.

In individual pension insurance, the PZU IRSA (Individual Retirement Security Account) insurance has been modified to adapt it to the new regulations effective as of 1 January 2021. From this date, the IRA and IRSA Act introduced a new amount limit for persons who conduct non-farming business activity.

These person may pay into IRSA up to 1.8 times the average forecasted monthly salary in the national economy for the given year. Other clients may pay into IRSA up to 1.2 times the average forecasted monthly salary for the given year.

PZU Życie cooperated actively with 4 banks, including the PZU Group’s banks, continuing the roll-out of a comprehensive offering using the banks’ distribution networks. The cooperation with Bank Pekao and Alior Bank allows PZU Życie to gradually expand the offering and volume of sales of insurance products linked to bank products. In 2020, life insurance for borrowers of Alior Bank’s mortgage loans was launched.

In the case of unit-linked products, sold by Bank Millennium, Bank Pekao and Alior Bank, promotional fees were offered to clients, which increased the attractiveness and competitiveness of the offer in the market. For the time of the pandemic, additional functionalities were launched in the self-service channels, facilitating client access and servicing of concluded agreements.

Factors, including threats and risks, that may affect the operations of the life insurance sector in 2021 

The main risk factors include: 

  • the COVID-19 pandemic and its social and economic consequences, in particular deterioration of the financial standing of businesses and employees from industries affected by the restrictions and the related problems with maintaining and paying for the policies, and the higher death rates among Poles and the need to develop modern, remote solutions for product distribution and service; 
  • availability of medical personnel in public health care; 
  • the prospect of lower interest rates and their impact on the insurance industry; 
  • softer conditions on the capital markets deteriorating the attractiveness of products, especially unit-linked products; 
  • demographic changes and the aging society and the ensuing changes in the mortality and fertility levels; 
  • constant price pressure in group insurance and the battle for client ownership (and client data), thereby cutting the insurer’s margins, reducing the quality of the product and fostering entry and exit obstacles for clients to overcome with independent intermediaries;
  • changes in client trends and behaviors towards customization of the offering; 
  • possible product intervention of the regulatory authority in the unit-linked fund segment; 
  • the emergence of new competitors and solutions from outside the insurance industry, including the operators of large client bases or insurtechs; 
  • continued development of the new pension security system (Employee Capital Schemes) and its impact on the products existing in the 3rd pillar of the pension system.