PZU forging ahead
The insurance giant closed the first quarter in good style. Investors could see record premium (5.8 billion PLN) and – in comparison with the previous year – doubled net profit. However, it was not the results that made competitors shake their heads in disbelief – the reason for which PZU is topping other insurance companies is the combined ratio, which measures profitability of particular business lines. For third party insurance policies sold by PZU, at the end of March it increased by little over 90 percent. The company managed to reach this result in just three months.
Answering the question how such a good result could be achieved in such a short time Roger Hodgkiss, Deputy President of PZU, claims it is not a result of accountancy tricks at all but several factors such as increased insurance policy prices. Yet, he stresses that they decided on price increases as one of the last insurers, and the increase was much smaller than that of their competitors. Despite that, thanks to big-scale operations, the actions guaranteed PZU satisfactory income. Price increases of, on average, 20% (while other insurance companies increased prices by 40-50 percent) attracted 800 thousand new clients to PZU.
At the same time, the insurer lowered the insurance policy sales costs and concentrated on own sales channels rather than sales though multi-agencies, because, as Hodgkiss claims, such solutions attract more profitable clients.
Currently, the only concern in the communications segment of PZU is comprehensive car insurance – although by the end of the previous year the product was profitable, in the first quarter of 2017 sales profit dropped rapidly. In response to the profitability drop, PZU decided to correct the prices of the dealer packages.