Market Report: Poland - Getting the green light.

(From Reinsurance)

Almost 13 years on from the fall of the Berlin Wall, the economic landscape has changed in Eastern Europe. State control has been replaced by a broad spread of western-style financial systems and privatised firms.

Western companies have also arrived and set up shop in various sectors of the economy.

Poland is seen by many companies as the most promising (re)insurance market in the former communist bloc of countries. Its geographical position next to Germany makes it easy to travel to and it is one of the 10 nations, including eight former communist countries, that will join the European Union (EU) in 2004.

The insurance market in Poland has grown almost out of all recognition from the communist era, when it was state-owned and has continued to grow steadily. In 1996 $3bn of new business was written in Poland, according to Swiss Re. In 2001 that had risen to $5.4bn, with life premium volumes coming to $1.9bn and non-life coming to $3.5bn. Poland is now the second largest Eastern European insurance market, behind Russia. Looking at premiums as a percentage of gross domestic product (GDP) in Poland, this has risen steadily from 2.3% in 1996 to 3.1% in 2001.

Elements of attraction

One reason why Poland has been so attractive to insurers is that it has seen some of the strongest economic growth in the former Soviet bloc after the fall of communism. According to the World Bank, in the 1990s Poland's GDP grew by an average of 5% a year, showing the best performance in the region. In recent years this has slowed to 0.5% in 2001 but it is predicted to rise again to 2.5% in 2003, according to the Organisation for Economic Co-operation and Development. Various Polish governments have also opened up the (re)insurance market to foreign companies and gone a long way to adapting its insurance regulations to EU standards.