Insurance activity in Poland is undertaken by establishing a local joint-stock company or mutual insurance company and obtaining a permit from the Polish Financial Supervision Authority (PFSA). Although there are certain advantages to establishing a local insurance company (it is perceived by the market as demonstrating a commitment to Poland), it is an expensive course of action.
The legal and actuarial fees are relatively high and there is a minimum capital requirement. It is also necessary to go through a lengthy and cumbersome licensing process, which may take several months. Finally, a domestic insurance company is subject to regulation by the PFSA.
Foreign insurers from EU and EEA countries may also undertake activity in Poland through a branch on the freedom of establishment basis or directly on the freedom-of-services basis. They are then permitted to carry out activities in Poland to which they are entitled in their home country on the basis of a relevant permit from the supervising authority of their home country. Insurers that intend to benefit from the freedom-of-services may start operating in Poland after the PFSA has received a notification from the relevant home country supervising authority. Insurers, who intend to establish a branch on the freedom of establishment basis, to start providing services, must additionally receive information concerning the conditions governing insurance activity in Poland.
Regarding operational aspects, a branch works in the same way as a local company. However, the costs are much lower – a branch does not require any initial capital and has a simplified organisational structure. Foreign insurers from EU and EEA countries that conduct activity in Poland on a freedom of establishment or freedom-of-services basis are regulated by their home country supervisory body. However, they have to follow general good rules which protect policyholders, insureds and beneficiaries under insurance contracts. Nonetheless, the Polish regulator is empowered to audit such foreign insurance companies except for their financial management. It can also enforce general ‘best practice’ rules, which are designed to protect policyholders, insureds and beneficiaries under insurance contracts.
Foreign insurers from countries outside the EU and EEA may undertake insurance activity in Poland only through a ‘main branch’ subject to a permit issued by the PFSA, or establish a subsidiary insurance company in Poland. The procedure of establishing a ‘main branch’ differs significantly from the procedure of establishing a branch of a foreign insurer from an EU or EEA country.
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