Reinsurance gets boost from Sejm
The remainder of the capital for Polskiego Towarzystwa Reasekuracyjnego (PTR) will come from leading Polish banks, insurance companies and foreign trade companies.
The Sejm, believing estimates that 36% of premiums went abroad through reinsurance and wanting to limit this capital outflow, passed a resolution in late March to set up the company. The Finance Ministry says the capital outflow figure is about 5%.
Risks here are overestimated by foreign firms, say those in the domestic industry, believing they know the risks here better. Poland, exposed to few potential natural disasters and boasting plenty of sturdy, utilitarian buildings, and undeveloped liability law, has a low risk factor, they say. Organizers say the planned reinsurance company will offer more competition, based on its assessment of lower risk.
In addition to gaining market share from the foreign companies dominating the market, PTR will take reinsurance business from Polish insurers, who now have but a fraction of the market. This separation of risks will be healthier for the industry, experts say.
Finance Ministry officials stress the government involvement is minor and the new company will not enjoy any tax or other privileges. Government involvement was welcomed by PTR's founding partners as the government connection was necessary to secure PHARE financing and expertise, say Finance Ministry officials.
PHARE, and the British Know How Fund, which will contribute a lower level of resources, have mandates to promote growth of local industry. This company, in the words of one ministry official, will be one "brick in the wall of insurance infrastructure."
Along with large companies, small insurers will participate in setting up the reinsurance companies in order to gauge their needs.
Small insurance companies have had great difficulty getting reinsurance and when they do, it is under "severe terms and conditions," says Leon Kozicki, president of the Polish Association of Insurance and Reinsurance Brokers. But such companies, he says, are reticent to talk about it. "Who will say they are not insured? Their customers may have doubts; it is very delicate," he says.
In turn, he says, some reinsurance companies are defensive about what they feel are complaints from small insurers.
Others agree small insurers are in a weak market position and so "there's a lot of room in the market" for the new entrant, says uukasz Kalinowski, chief operations manager for Amplico Life. He also believes it won't have much effect on capital outflows because here "the risks are so big, no local company can handle it alone" and will have to cede risk abroad, as existing Polish insurance companies do with some of their reinsurance business.
Within three to five years, the company wants to assume risks in other developing markets in Eastern and Central Europe, which have similar types of risks.
The company will look for cooperation with foreign firms, primarily to provide training abroad, and this could include a strategic investor.
Along with the Finance Ministry representing the State Treasury, other firms holding shares in PTR include banks Bank Handlowy w Warszawie SA and Bank Przemys*owo-Handlowy SA, insurance companies PZU SA, PZU uycie SA, TUiR WARTA SA, TU Gryf SA, ZU Hestja SA and TUiR SA, and foreign trade companies Elektrim SA and Stalexport.
The Sejm, believing estimates that 36% of premiums went abroad through reinsurance and wanting to limit this capital outflow, passed a resolution in late March to set up the company. The Finance Ministry says the capital outflow figure is about 5%.
Risks here are overestimated by foreign firms, say those in the domestic industry, believing they know the risks here better. Poland, exposed to few potential natural disasters and boasting plenty of sturdy, utilitarian buildings, and undeveloped liability law, has a low risk factor, they say. Organizers say the planned reinsurance company will offer more competition, based on its assessment of lower risk.
In addition to gaining market share from the foreign companies dominating the market, PTR will take reinsurance business from Polish insurers, who now have but a fraction of the market. This separation of risks will be healthier for the industry, experts say.
Finance Ministry officials stress the government involvement is minor and the new company will not enjoy any tax or other privileges. Government involvement was welcomed by PTR's founding partners as the government connection was necessary to secure PHARE financing and expertise, say Finance Ministry officials.
PHARE, and the British Know How Fund, which will contribute a lower level of resources, have mandates to promote growth of local industry. This company, in the words of one ministry official, will be one "brick in the wall of insurance infrastructure."
Along with large companies, small insurers will participate in setting up the reinsurance companies in order to gauge their needs.
Small insurance companies have had great difficulty getting reinsurance and when they do, it is under "severe terms and conditions," says Leon Kozicki, president of the Polish Association of Insurance and Reinsurance Brokers. But such companies, he says, are reticent to talk about it. "Who will say they are not insured? Their customers may have doubts; it is very delicate," he says.
In turn, he says, some reinsurance companies are defensive about what they feel are complaints from small insurers.
Others agree small insurers are in a weak market position and so "there's a lot of room in the market" for the new entrant, says uukasz Kalinowski, chief operations manager for Amplico Life. He also believes it won't have much effect on capital outflows because here "the risks are so big, no local company can handle it alone" and will have to cede risk abroad, as existing Polish insurance companies do with some of their reinsurance business.
Within three to five years, the company wants to assume risks in other developing markets in Eastern and Central Europe, which have similar types of risks.
The company will look for cooperation with foreign firms, primarily to provide training abroad, and this could include a strategic investor.
Along with the Finance Ministry representing the State Treasury, other firms holding shares in PTR include banks Bank Handlowy w Warszawie SA and Bank Przemys*owo-Handlowy SA, insurance companies PZU SA, PZU uycie SA, TUiR WARTA SA, TU Gryf SA, ZU Hestja SA and TUiR SA, and foreign trade companies Elektrim SA and Stalexport.
