Regulations - insurance market and the financial markets in Poland

Considering the regulations pertaining to the insurance and financial markets in Poland that were adopted in 2021, it is clear to see the growing importance that the European Union places on sustainability.

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”), has been in force, in principle, since 1 January 2022. The regulation sets out the criteria against which "green" financial products can be built. It also introduces the need to use labels in information about the products offered that indicate whether or not we are dealing with a product taking account of the taxonomy. In addition, a company that is required to publish non-financial information will be required to include in its non-financial statement or consolidated non-financial statement information on how and to what extent its business relates to economic activity that qualifies as environmentally sustainable.

On 1 January 2022, delegated acts to the taxonomy also came into effect:

• Commission Delegated Regulation (EU) 2021/2178 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by specifying the content and presentation of information to be disclosed by undertakings subject to Articles 19a or 29a of Directive 2013/34/EU concerning environmentally sustainable economic activities, and specifying the methodology to comply with that disclosure obligation;
• Commission Delegated Regulation (EU) 2021/2139 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives.

On 2 August 2022, in turn, amendments to the following regulations enter into effect:

• Delegated Regulation (EU) 2015/35 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II). In accordance with the amendments, insurance undertakings will have to reflect, among other things, sustainability risks in their system of governance. The risk management function will be required to identify and assess risk to sustainable development, while the actuarial function will be required to consider the risk to sustainable development in assessing the uncertainty associated with estimates made in calculating technical provisions;
• Commission Delegated Regulation (EU) 2017/2358 supplementing Directive (EU) 2016/97 of the European Parliament and of the Council with regard to product oversight and governance requirements for insurance undertakings and insurance distributors. The amendments include testing the product on whether it meets the sustainability goals of the target group customer;
• Commission Delegated Regulation (EU) 2017/2359 supplementing Directive (EU) 2016/97 of the European Parliament and of the Council with regard to information requirements and conduct of business rules applicable to the distribution of insurance-based investment products. In this case, the amendments include, among other things, obtaining information from the client to assess whether the product meets the client's sustainability preferences and offering a product that meets the client's sustainability preferences.

Among the national regulations that will affect the insurance market, the amendment to the Civil Code that came into effect on 19 September 2021 is significant. They provide for the possibility of granting general damages to the closest members of an injured person’s family in the event of serious and permanent damage to his or her body or an event causing a health disorder resulting in the inability to establish or continue family ties. The amendments are intended, in accordance with their substantiation, to remove discrepancies in judicial decisions in cases where general damages are sought for the closest family members of the injured person for harm in the form of broken family ties. The adopted solution applies to events that occurred before entry of the amendment into force, which may result in the filing of additional claims against insurance undertakings by the closest family members of the injured persons.

Material changes for drivers have been brought about by the amendment to the Road Traffic Law, which came into force on 1 January 2022. Among the changes introduced, one should mention the possibility for insurance undertakings to link the amount of motor insurance rates with the type of offences committed by a driver which constitute violations of road traffic regulations and the penalty points assigned to them. This change will come into force on 16 June 2022 and may, together with higher fines, have a positive impact on road safety and thus reduce the amount of claims paid by insurance undertakings. On the other hand, on 31 January 2022, an amendment to the Road Traffic Law will come into force providing for the possibility of temporary withdrawal of a damaged passenger car from traffic (for a period from 3 to 12 months). This amendment may result in an increase in the number of requests for a pro rata reduction in TPL insurance premiums for the period of temporary withdrawal of a damaged vehicle.

On 5 October 2021, the Electronic Delivery Act of 18 November 2020 came into force. It is related to the progressing computerization, which includes the exchange of correspondence. In accordance with the introduced regulations, companies from the PZU Group are obliged to create an address for electronic deliveries, which will be entered in the database of electronic addresses kept by the minister competent for informatization.

On 1 January 2022, KNF's decision of 15 July 2021on prohibitions on marketing, distribution and sale of insurance-based investment products – life insurance contracts, if they are unit-linked (product intervention) came into force. Among other things, the decision prohibited the marketing, distribution and sale of unit-linked life insurance contracts for which the average return is less than 50% of the interest rate for the period specified in the decision according to the relevant risk-free rate term structure. The product intervention does not apply to enrollment in group insurance concluded before 1 January 2022, and does not apply to Employee Capital Schemes, Employee Pension Schemes, Individual Retirement Security Accounts and Individual Retirement Accounts.

Selected Supreme Court rulings affecting insurance activity

• Judgment of the Appellate Court in Rzeszow of 26 January 2021 (case file I ACa 461/19), in which the court held that in the case of violation of emotional ties between family members in such a way that only a change or deterioration of those ties occurs, the person closest to the injured party, who suffers a sense of harm because of that, is not entitled to general damages.
• Judgment of the Appellate Court in Warsaw of 11 June 2021 (case file VI ACa 101/20), in which the court ruled on the maturity of claims for monetary general damages for harm suffered.
• Judgment of the Appellate Court in Poznań of 2 June 2021 (case file I ACa 377/20) as regards general damages and claims paid to the life partner, according to which the concept of family cannot be limited only to the spouse, ascendants, descendants and relatives by marriage. Also, a cohabitation of several years, in which both cohabitants' material and emotional needs, aspirations for self-fulfillment and a sense of security were met, should be considered a family.