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30. Deferred acquisition cost

PZU AR 2021 > Results > Supplementary information and notes > 30. Deferred acquisition cost
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30.1 Accounting policy

Deferred acquisition costs are tested for impairment since that they are included in the calculation of adequacy of technical provisions.

30.1.1. Non-life insurance

Acquisition expenses in non-life insurance are deferred in line with the principles applicable to the determination of the provision for unearned premiums by amortizing them through the profit and loss account during the indemnity period (recognized under “Acquisition expenses”).

Deferrals apply to acquisition commissions and a portion of indirect acquisition expenses related to the signing and renewals of insurance policies, in particular costs related directly to sales processes, which cannot be classified as direct acquisition expenses, in particular costs of activities related to: agreement origination processes and underwriting processes in sales units (separated by using working time questionnaires), automatic and manual entry of policies into production systems (registration of sales) and contact center operations related to the sales of policies.

30.1.2. Life insurance

In life insurance, for traditional profit-sharing products (life and endowment insurance or birth assurance), acquisition expenses are amortized over time using the Zillmer method.

30.2 Quantitative data

Deferred acquisition expenses 31 December 2021 31 December 2020
Short-term 1 414 1 409
Long-term 159 141
Total deferred acquisition expenses 1 573 1 550

Movement in deferred acquisition expenses 1 January – 31 December 2021 1 January – 31 December 2020
Net value at the beginning of the period 1 550 1 574
   Non-life insurance 1 423 1 459
   Life insurance 127 115
Acquisition expenses pertaining to future periods 1 898 1 745
Amortization for the period recognized in financial result -1 854 -1 769
Impairment losses in the period -21 -
Net value at the end of the period 1 573 1 550
   Non-life insurance 1 438 1 423
   Life insurance 135 127