Assets without proper security

Luc Williams

The insurance gap is the difference between the economic loss resulting from insurable events during the year and the amount of compensation and benefits paid in this respect as well as own funds that can be used to cover the loss. It also identifies risks for which the interested parties have not insured themselves.

The Swiss Re Institute estimated that Poland is only 15th among economies with the highest index of resistance to the effects of natural disasters, out of 39 countries examined. The risk of disasters is therefore high. At the same time, according to PIU data, less than 50 percent residential and business properties are protected by insurance. Therefore, the Chamber decided to examine how the security gap is divided into each of these segments.


PIU data shows that 72% of people in the country are insured. single-family buildings and 40 percent multifamily. This gives an average of 49 percent. objects. The estimated value of residential real estate at the end of 2022, according to the NBP report on the situation on the real estate market, is approximately PLN 6.5 trillion.

What do these data mean in practice? With an insurance factor of 50%. and the assumption that the value of insured real estate is twice as high as that of uninsured real estate, indicate that residential real estate in Poland is unsecured in the amount of over PLN 2 trillion.

However, lack of insurance is only one factor in the insurance gap. Another is that policyholders conclude property insurance contracts for too low an insurance sum. The main reason is the lack of updating it, for example in connection with inflation and rising prices of building materials and services. Market estimates show that this situation may affect up to 3 out of 10 properties.

This is indicated by research on the insurance gap conducted for PIU in June 2022 among insurance agents. According to these studies, an average of 42 percent agents claim that their clients want to insure themselves for a lower amount than the proposed amount in order to reduce the cost of insurance. According to 53 percent agents, the sum insured for the property is adequate to its value, and 45 percent believes that these amounts are rather or definitely lower than the value of the house or apartment. Agents usually indicate that this sum is lower by an average of 31%.

According to 40 percent agents, the sum insured for household movables is adequate to their value, and as much as 55 percent believes that these sums are rather or significantly lower than their value. Agents usually indicated that the sum insured for household movables is on average 49% lower.

What is the reason for this situation? Knowledge on this subject is provided by other PIU studies, the aim of which was to examine attitudes towards risk and willingness to take out insurance. They show that almost one fifth of respondents do not know how to estimate their assets. 14 percent respondents indicated that the total value of their assets may range from PLN 100,000 to PLN 300,000. PLN, and 13% say it is PLN 300,000-500,000. zloty. More than half of the respondents also did not know what part of the value of their property was covered by insurance. 21 percent respondents estimated that it was more than half of the value, while 18% estimated that the insurance covered less than half of the value of the property.

However, Central Statistical Office data may help in underestimating insurance sums. According to those for the second quarter of 2023, the price increase for residential premises compared to last year was 7.0 percent, and for services and construction materials – 10.4 percent. The average increase in prices of residential premises over the last 8 years has been by 75%. This means that failure to update the sum insured only in the last two years would result in it being understated by 20%. However, if the value of the property had not changed in the last three years, then the underestimation of the insurance sum would be 30%.

As estimated by PIU experts, assuming that 40 percent insured real estate would have an underestimation of the sum insured by 20%, the total underestimation of the sum insured for residential properties in Poland would amount to PLN 255 billion.

Experts note that you do not have to wait until a new contract is concluded to update the insurance sum. You can change it at any time.

Enterprise sector

What does the insurance gap look like in the corporate sector, where the insurance amount for a given asset is determined either based on the gross book value, i.e. at which the fixed asset was purchased or built, or according to the replacement value, i.e. the value of funds allowing for the replacement of the given asset? asset in the event of damage? The insurance sum can also be determined on the basis of the so-called actual value, i.e. replacement value less the degree of technical wear and tear.

The most popular solution is the one based on replacement value. It applies to 69 percent. enterprise sector. Entrepreneurs who use this method usually update the insured amounts. Quite the opposite to those who use the book value as the basis for calculating the sum insured. And this happens in the case of up to 30 percent. enterprises. Therefore, the problem of underinsurance concerns such companies to a greater extent.

Meanwhile, according to research conducted as part of the property insurance committee of the Polish Chamber of Insurance, in the years 2020–2022, the sums insured in property insurance for companies increased by an average of 15%. PIU experts add that at the end of 2022, the insurance gap, i.e. the difference between the actual increase in the value of the insured property and the current insurance sum, was 22.4%.


Property insurance also includes vehicle insurance. Here, as experts explain, we are also dealing with an insurance gap. This is evidenced by the fact that in Poland, at the end of 2023, there were 7.4 million AC contracts and 28.1 million third party liability insurance contracts. This means that only 26.3% had voluntary insurance. vehicles.

For the purposes of estimating the gap in motor insurance, PIU experts assumed that most cars with casco insurance are newer vehicles, i.e. no more than 15 years old, and that there is a difference between the value of the vehicle in the group of insured and uninsured vehicles. It was found that on average the value of an uninsured vehicle in relation to the value of an insured vehicle is 50%. This is the result of comparing the average value of a vehicle aged 10-15 years (average 12.5 years) to the average value of the insured vehicle (average 6-7 years). The adopted indicator is consistent with market observations. The decline in the value of the car in subsequent years was also taken into account, based on a database of used car prices for 35 popular car models. The frequency of claims is the same for insured and uninsured cars, and the total amount of payouts under casco insurance for 2023 amounted to PLN 7.3 billion. Therefore, casco insurance has 26.3%. cars, the insurance gap due to the lack of additional insurance amounts to PLN 4.6 billion. This means that in the event of damage, the cost of repairing the car will have to be covered by the user from his or her own funds.

What is the relationship between the value of the houses and apartments insured by customers and the insurance sums selected by them / Dziennik Gazeta Prawna – digital edition

Read more in the DGP supplement | Insurance


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