The economic life and regulations adopted in 2020 were shaped by the challenges caused by the COVID-19 pandemic. Legislative solutions aimed at reducing the economic consequences of the pandemic on the Polish economy were adopted as part of “Anti-Crisis Shields”, in particular:
Apart from anti-crisis solutions (such as exemption from payment of social security contributions, micro-loans and idle time pay), the “Anti-Crisis Shields” aligned legal solutions with the new reality.
Amendments to the Commercial Company Code enabled the holding of meetings of the company’s corporate authorities via means of distance communication. They also extended the possibility of remote work by the company’s corporate authorities, in particular by changing in the manner of holding meetings and adopting resolutions by the Supervisory Board by written procedure or using means of direct remote communication. This also applies to matters for which a company’s articles of association provide for the holding of a secret ballot, provided that none of the supervisory board members raises an objection.
The regulations of the “Anti-Crisis Shield” also have a direct impact on changing the organization of work at PZU, because in 2020 and until the date of publication of this report they have served as the basis for a large portion of the Company’s employees to work remotely. As regards the organization of work and the operation of PZU branches, PZU’s business during the epidemic has also been affected by regulations issued by the Council of Ministers on the establishment of certain restrictions, orders and prohibitions related to the announcement of the state of epidemic and recommendations of the State Labor Inspection Service. In accordance with these regulations, PZU has taken steps to ensure safe working conditions for its employees and agents and to provide safe customer service operations.
Another major change was the loosening of requirements for the rotation of audit firms. The maximum permissible uninterrupted duration of engagements for the conduct of statutory audits by the same audit firm, any of its related parties or members of its network operating in the European Union has been increased from 5 to 10 years.
On 19 May 2020, the Regulation of the Minister of Finance of 14 May 2020 Amending the Regulation on the Examination for Persons Applying for the Performance of Agency Activities, Distribution Activities of an Insurance Company and Distribution Activities of a Reinsurance Company entered into force and defined the conditions for the conduct of such examinations using an ICT system during the period of the epidemic. Then, on 27 May 2020, the Regulation of the Minister of Finance of 22 May 2020 Amending the Regulation on Applications for Entry in the Register of Insurance Agents and Agents Offering Supplementary Insurance entered into force. These amendments permit the submission of an application for entry on the basis of copies of documents during the period of an epidemic threat, epidemic or emergency.
In connection with the pandemic, solutions for insurance companies have also been prepared by the Polish Financial Supervision Authority, entitled: “Supervisory Incentive Package for Security and Development of the insurance industry”. These solutions are aimed to:
The Polish Financial Supervision Authority also initially recommended that insurance companies refrain from paying out dividends from their 2019 profits. In December, KNF issued a statement regarding its assumptions for the dividend policy in 2021, according to which a dividend in the maximum amount of 100% of the profit generated in 2019 and 50% of the profit generated in 2020 may be distributed by insurance and reinsurance companies that meet the criteria defined in KNF’s document.
Moreover, the insurance sector has developed its own solutions to assist clients affected by the COVID-19 pandemic. The Polish Insurance Association has issued “Recommendations for procustomer actions for the insurance market”. The postulates of this document are as follows:
Measures to be taken in the state of epidemic are also laid down in the Act on Supporting the Insurance Market for Trade Receivables in Connection with Counteracting the Economic Effects of COVID-19, which was adopted by the Sejm on 19 July 2020. The Act specifies the terms and conditions under which the State Treasury may take over from insurance companies certain risks arising from insurance contracts on trade receivables, the provisions of which are applicable to receivables arising in the period from 1 April to 31 December 2020. In accordance with the Act, the State Treasury, under an agreement entered into with an insurance company, may undertake to take over 80% of the insurance risk arising from the insurance portfolio of trade receivables. The State Treasury’s liability may not exceed the amount equivalent to 375% of the gross written premium of the insurance company generated from its insurance of trade receivables in 2019.
On 4 May 2020, the Regulation of the Minister of Health of 28 April 2020 on Information to Be Provided to Insurance Companies by Entities Performing Medical Activities and by the National Health Fund entered into force. In accordance with this Regulation, the insurance undertaking’s application to an entity performing medical activities or the National Health Fund must be accompanied by data on the health condition of the insured person or the person on whose account the insurance contract is supposed to be entered into, and the insurance undertaking must only enclose information about the consent of the person concerned or his or her statutory representative, along with the date and form of expressing such consent. The amendment results in the revocation of the previously binding requirement to receive written consent from clients of insurance companies, which made it difficult to enter into insurance contracts remotely.
A regulation that may be adopted in 2021 and may potentially exert a major impact on the operations of the PZU Group is the planned amendment to the Commercial Company Code. It is expected to introduce into Polish law the so-called ‘holding law’ governing private and legal relations between the parent company and its subsidiaries and improving governance in companies.
Some of the consequences of the COVID-19 pandemic will probably involve a greater focus on solutions aimed at protection of the natural environment. The European Union’s ambition is for Europe to become a climate-neutral continent by 2050. To this end, it intends to pursue the European Green Deal initiative, one of the elements of which is to redirect resources of financial institutions towards the funding of investments contributing to sustainable development.
On 29 December 2019, Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector, entered into force. It is scheduled to be applied from 10 March 2021. It applies, without limitation, to insurance companies that offer insurance-based investment products. The Regulation imposes on financial market players certain disclosure requirements related to sustainable development. Such entities are required, without limitation, to publish on their websites information about their strategies on the integration of sustainability risks in their investment decision-making process.
On 12 July 2020, Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment (“taxonomy”), entered into force. It defines the criteria for building “green” financial products. It has also introduced the need to use markings in product information letting the user know whether they are products that include the “EU taxonomy”, i.e. a classification system for the taking of action aimed at reaching sustainable development objectives. Moreover, a company that is required to publish non-financial information will be required to report in its non-financial statement or consolidated non-financial statement how and to what extent its business relates to economic activity that qualifies as environmentally sustainable. The Regulation is expected to be applied, in principle, from 1 January 2022.
Among the Supreme Court rulings handed down in 2020 with regard to the insurance business, the following were the most important:
On 13 March 2020, in case no. III CZP 63/19, the Supreme Court ruled that incurring an obligation by the injured party to pay the rent for a replacement vehicle constitutes a loss within the meaning of Article 361 § 2 of the Civil Code which remains in a causal relationship with the related traffic accident.
On 17 July 2020, in case no. III CZP 75/19, the Supreme Court ruled that the benefit disbursed by the insurer in the event of an early termination of a unit-linked life insurance contract is not the main benefit within the meaning of Article 385 1 § 1 sentence 2 of the Civil Code.
On 22 July 2020, in case no. III CZP 31/19, the Supreme Court recognized in its resolution that an injured party who has suffered a bodily injury or health disorder may claim, pursuant to Article 444 § 1 of the Civil Code, indemnification for the costs of care provided to him or her gratuitously by relatives.
On 11 September 2020, in case no. III CZP 90/19, the Supreme Court announced in its resolution that indemnification under third party liability insurance of a motor vehicle owner, payable to the lessee in connection with expenses incurred for the repair of a damaged leased vehicle, must include the amount of value-added tax to the extent the lessee may not reduce the amount of tax payable by him or her by the amount of tax paid.