Legislative Changes in Poland in the Insurance Sector

The end of 2022 and all of 2023 were full of legislative changes in Poland. Below we provide an overview of the changes that will have the greatest impact on the activities of insurers operating in the Polish market.

 

Recommendation on Bancassurance, issued by KNF (Polish Financial Supervisory Authority) of 26 June 2023

The aim of the Recommendations is to improve the standards of bancassurance business and to set the conditions for stable market development. A key element is to ensure that customers receive good value for the insurance products offered through bancassurance. The Recommendations aim to regulate relations in this market, especially in the context of protecting consumers and the conduct of bancassurance activities by banks. It concerns the bank’s management and supervisory board, the bank’s risk hedging, the role of the bank, the accounting policy, customer relations, the internal control system for bancassurance, and compliance.

 

KNF’s Recommendations of 15 September 2023 for insurance companies on assessing the suitability of life insurance with an investment element

These Recommendations will replace the Recommendations for Insurance Undertakings on Product Adequacy Testing of 22 March 2016, and explain and clarify the changed legal environment for insurance product adequacy testing.

The Recommendations are intended to contribute to strengthening the protection of the customer’s interests, and they constitute an important step towards ensuring higher quality and transparency of the process of life insurance distribution with an investment element.

 

Act of 16 August 2023 amending certain acts in connection with ensuring the development of the financial market and the protection of investors in that mark et

This Act aims to improve the functioning of financial market institutions, in particular with regard to eliminating barriers to accessing the financial market, improving supervision, protecting customers, protecting minority shareholders in public companies and increasing digitisation in the implementation of supervisory duties by the Office of the Financial Supervision Commission.

The Act amends 41 laws, for example:

• It provides life insurance insureds with an insurance capital fund, with protection comparable to that provided to participants in open-ended investment funds with respect to the investment activities carried out by these funds.
• It regulates the obligations of insurance companies and the Insurance Guarantee Fund (responsible for payment of compensations to injured parties in traffic accidents and collisions caused by uninsured motor vehicle owners and uninsured farmers) in the event of the guaranteed sum being exhausted, and issues relating to membership in the Insurance Guarantee Fund of foreign insurance companies.
• It introduces regulations regarding the IT database maintained by the Insurance Guarantee Fund.

 

Amendments to the Commercial Companies Code

The amendment to the Commercial Companies Code, which entered into force on 13 October 2022, extended the powers of corporate bodies. The amendment has created new rules governing the liability of members of the governing bodies of a company that is part of a group of companies. The amendment has had an impact on the design of various indemnity insurance products, in particular insurance for the company and members of its bodies, in particular directors and officers (D&O) insurance.

 

Criminal Code

On 1 October 2023, a major revision of the Criminal Code came into force, creating new types of offences. The most important one, from an insurer’s point of view, is that the driver of a car without valid third-party liability insurance who fails to pay compensation to the victim may be imprisoned for up to five years. If the damage is repaired by the Insurance Guarantee Fund instead of the offender, the offender can expect to receive a recourse claim from the Fund, ie a demand for reimbursement of the repair costs plus interest.

In summary, the legal changes aim to broaden the protection of insureds, and the transparency of insurance products; insurers will have to adapt to the changes and amend their distribution strategy accordingly. The changes will also have an impact on D&O insurance products offered on the Polish market.

If you would like to learn more about any of these issues or have any insurance-related questions in Poland, please do not hesitate to contact the authors.