Poland: the heat is on the insurance sector – PFSA’s agenda for insurance supervision in the years 2020-2024

Poland

The Polish Financial Supervision Authority (“PFSA” or “KNF”) announced its priorities for insurance supervision in the years 2020-2024. Importantly, the PFSA emphasized that it perceives its role not only in terms of prudential supervision, but also it would like to focus on the protection of consumers on financial services market.

The key takeaways and tasks include, among others:

  • Reviewing and updating the Solvency II system:
    • evalution of professional experience, skills and warranty to duly conduct the insurance company’s affairs of persons holding key functions (initial and ex-post assessment);
    • reviewing the key functions (risk management, actuarial function and internal audit) and issuing recommendations in this respect;
    • assessment of reporting reliability and quality of data and information provided;
    • introducing additional, more extensive reporting obligations on distribution channels, the key distributors of insurance products and on products sold by insurance companies.
  • Scrutiny over managing the customer relationship risk, including:
    • product intervention - a decisions on product intervention are scheduled to be issued in April 2020 (in respect of product intervention please see our e-alert. Importantly, the PFSA clarified some time ago that product intervention measurers will not affect the insurance contracts already concluded, i.e. it will only apply to insurance products sold after the PFSA’s decision enters into force);
    • audits concerning insurance investment products - by the end of 2021 the KNF intends to inspect all life insurance companies offering unit-linked insurance for correctness of their customer needs analyses.
    • vehicle owners’ third-party liability insurance - audit of the loss adjustment proceeding as regards timeliness, information obligations and loss payments. The KNF intends to co-operate with the Ministry of Justice in drafting statutory legislation (e.g. introducing regulations on substitute vehicles).
    • evaluation of remuneration schemes of insurance distributors;
    • audits concerning management of IPIDs and KIDs (in respect of preparation, distribution, and updates).
  • Insurance distribution:
    • one of the activities of the supervisory body as part of the supervision over the distribution of insurance products is to initiate and conduct a multi-threaded survey addressed to insurance companies (in 2019 the PFSA sent questionnaires to selected insurance companies, and the second round of the survey is in the pipeline);
    • on-site and off-site inspections concerning implementation and application of IDD requirements (focus on bancassurance channel);
    • audit-based supervision of insurance distributors. The first measure planned for 2020 is an audit of banks, insurance distributors, the largest multi-agencies and selected brokers. Audits will also be carried out in small and medium-size insurance agencies and brokers. The PFSA will also put spotlight on supervision exercised by insurance companies over distributors;
    • in the long run: analysis of laws regarding insurance distribution. The KNF sees the need to modify certain solutions adopted at the stage of implementing the IDD regulations, including those concerning the possibility of imposing fines for a violation of the obligation to conduct professional training courses;
    • the PFSA assumes that post-audit recommendations will be the standard supervisory measure in the event of irregularities detected during the inspections. Nevertheless, in the event of a gross violation of the law, or hindering audits, the PFSA will action more stringent measures (e.g. fines).

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