Board of Directors Report on the Company’s Business Activities and Financial Situation
Česká pojišťovna – Tradition and Innovation
Česká pojišťovna’s traditions date all the way back to 1827, when the articles of an institution called Císařsko-královský, privilegovaný, český, společný náhradu škody ohněm svedené pojišťující ústav (Imperial-Royal Privileged Bohemian Joint Fire Damage Insurance Institute) were approved. That outfit initially offered no more than fire coverage. More than 185 years later, Česká pojištovna remains an innovative company in touch with its traditions. This stance makes it a composite insurer providing a comprehensive range of services, encompassing life and non-life personal lines, and insurance for small, mid-sized, and large customers covering industrial and business risks and agriculture. Česká pojišťovna has therefore deservedly long been regarded as the Czech insurance market leader.
In 2015, Česká pojišťovna ushered in a raft of innovations in its processes and products. Now that more than 600 special devices known as signature pads are available in all Česká pojišťovna branches, the Company’s customers can sign documents electronically. This has made the entire service process faster, more convenient for customers and – needless to say – more environmentally friendly. The Customer Zone has also been upgraded and can now be set up online from the comfort of the customer’s own home.
As far as products are concerned, the marketing of Comfort has innovated MTPL. This product offers generous policy limits, personal accident insurance for the driver and all passengers, a three-year price guarantee, the opportunity to file an initial claim with no effect on the no-claims bonus, and a broad range of breakdown cover.
One major achievement saw the relocation of the Company’s data centre to a shared facility in Italy completed in a move of such magnitude that it was the largest infrastructure transfer witnessed not only in the Czech Republic, but anywhere in Europe. The high professionalism of specialists employed by the largest Czech insurance company was underscored by the fact that such a large-scale and complex project passed off with no blanket outages in IT services or applications.
In 2015, Česká pojišťovna once again triumphed in prestigious industry competitions. In Hospodářské noviny’s tough Best Insurance Company 2015 contest, we were second in the Best Life Insurance Company category and came third in the Most Customer Friendly Non-life Insurance Company category.
Helping in 1827, Helping Now
Česká pojišťovna has been a friend in need ever since its formation, when it supported the orphans of firefighters who had tragically died in action. Česká pojišťovna continues to support many charities and community activities via its foundation.
The foundation’s pursuits, closely linked to the operations of Česká pojišťovna, are structured around three core areas of assistance: prevention (encompassing road traffic and personal accidents); the support of regional projects to help the public and non-profit organisations; and corporate volunteering. All of Česká pojišťovna’s employees are entitled to devote two fully paid working days a year to volunteering. This means that Česká pojišťovna’s charity work is not blinkered. Instead, assistance is spread out among various areas and regions.
The Czech Insurance Market – Situation and Outlook
2015 in Review
Statistics maintained by the Czech Insurance Association show that premiums written on the Czech insurance market climbed by 1% to CZK 116 billion in 2015. The driver was non-life insurance, which progressed along its positive trajectory and expanded by almost 4%. The most dynamic segment was collision insurance, reporting 6% growth on the back of a boom in new-vehicle sales. Conversely, the momentum of MTPL slowed to 2% and the average market price actually contracted. There was no repeat of the price increase caused in 2014 by additional costs incurred in conjunction with new legislation.
The situation prevailing in life insurance was not as sanguine, as premiums written declined by 2%. Even so, one piece of good news here is that the scales are gradually tipping away from unit-linked insurance towards life insurance as a vehicle for protection against risks.
Market position rankings show that Česká pojištovna remains the market’s largest insurer by a country mile, with a share of 23%,4 followed by Kooperativa and Allianz.
The insurance market did not escape legislative changes even in 2015. In mid-January 2015, uninsured drivers’ contributions to the Czech Insurers’ Bureau’s Guarantee Fund – used to cover damage caused by such drivers – were scrapped. Any such damage is now covered by insurance companies’ contributions. The Czech Insurers’ Bureau expects this measure to increase the number of uninsured vehicles.
Travel agency failure insurance was also affected by the new legislation. In response to the frequent problem of the insufficient limit of indemnity, the original version of the legislative amendment stipulated that insurers would satisfy customers’ claims in the event of travel agency insolvency even beyond the agreed limit of indemnity. However, as this went against the principles of insurance, a compromise was reached. The limits were preserved and the issues stemming from travel agencies’ inadequate insurance should be resolved by the establishment of a guarantee fund, which would be used to pay costs exceeding the limit of indemnity.
Changes tabled in 2015 but still awaiting approval should have a much greater impact on how the insurance market develops. This list is headed by an amendment to the Insurance Act, drafted to transpose the European Solvency II Directive into Czech legislation. Insurance companies spent several years gearing up for this change, which was meant to come into force on 1 January 2016. The amendment included a proposal to regulate commission for financial intermediaries, but as the Chamber of Deputies was unable to reach a consensus on this the bill was rejected in its entirety.
The pension system went through major changes. In 2015, a law came into force that removed the second pension insurance pillar and made changes to the third pillar to make it more attractive for customers, pension companies and intermediaries. The largest manager of savings under supplementary pension schemes is Penzijní společnost České pojišťovny.
Outlook for 2016
Forecasts that the Czech economy will progress along positive lines pave the way for further growth – especially in non-life insurance – on the insurance market. Business insurance should be supported by intensified investment among companies and the government alike, while motor insurance is expected to benefit from the rising numbers of insured cars and the corresponding surge in collision insurance riders on MTPL.
In the legislative sphere, amendments to the Insurance Act and the Insurance Intermediaries Act are set to be revisited by the government and will take centre stage. During the year, the government should also concentrate on an amendment to the Motor Third-Party Liability Insurance Act in order to harmonise Czech legislation with a decision by the European Court of Justice decreeing that all propelled vehicles should be insured even if they are not currently being used on public roads.
4 Czech Insurance Association. Statistické údaje dle metodiky ČAP 1–12/2015 [online]. ČAP ©2014 [accessed 2016-03-01]. Available from: http://cap.cz/images/statisticke-udaje/vyvoj-pojisteno-trhu/STAT-2015Q4-CAP-CZ-2016-01-26-WEB.pdf