Monika Lis explains why determination and perseverance are proving important for actuaries in this Central European nation
Marie Curie – born Maria Skłodowska in Poland – used to say that nothing in life is to be feared, it just needs to be understood. In a changing world, our understanding can only be as good as the data we can base it on, and the ability to manage uncertainty has never been more necessary.
Since I qualified as an actuary in Poland more than a decade ago, the number of actuaries in the country has doubled, reaching 417 last year. They have traditionally been employed by one of 80 insurance companies, or within consultancies – but our combination of mathematical, coding and analytical skills makes us ideal for many other industries, including data science or IT more generally.
There is no single professional training programme to follow if you want to qualify as an actuary in Poland. This was especially evident 10 years ago, when we only had access to actuarial questions, without any hints on how to arrive at the answers. We had to get used to dealing with uncertainty, which helped us build determination and perseverance – skills that are valued over and above the exams alone.
Rising regulation
Working in consultancy has allowed me to understand the insurance industry from multiple perspectives. In particular, it helped bring technical aspects and legal requirements together early on, with these ‘boundary conditions’ being key to understanding the rationale for the technical aspects. I now work as a consulting manager, but have worked across much of the Polish market during time spent on client projects.
Increased European and local regulation presents a major challenge for Poland’s insurance industry. This is where actuaries can have the biggest impact: breaking through the flood of data and analysis to provide concise summaries. We are on the frontline and have the technical knowledge. We see the sources of profit and whether the balance between profit margin and consumer protection may be shifting from equilibrium.
By way of example, after a boost in the development of investment products due to the high interest rates of the early 2000s, the Polish insurance market was subject to supervisory intervention and consumer protection regulation. Many companies faced fines from the Polish Competition and Consumer Protection Office, as well as unfavourable court decisions relating to product charges. On top of this, the Polish Financial Supervisory Authority imposed a ban on new sales of unit-linked products that did not provide a return of at least 50% of the risk-free rate, although this required the green light from the European Insurance and Occupational Pensions Authority (EIOPA).
Recent challenges
Poland has been considerably impacted by COVID-19 and the war in Ukraine, with 3.9 million refugees seeking asylum at the time of writing. Inflation and interest rates have skyrocketed, with the yield on 10-year government bonds reaching its peak of 8.1% per year in June. For unit-linked products, this meant that the problems of low interest rates have abated. COVID-19’s biggest impact was on group life products, for which the claim ratio increased by almost 11 basis points compared to the 2017–19 average.
The move away from investment products has put the spotlight on health insurance, and growth here has been accelerated by the pandemic. One pandemic outcome has been the introduction of telemedicine, e-prescriptions and e-referrals. Although these had been developed several years before, nobody expected them to be taken up so quickly – they have now replaced 60% of regular on-site visits in the private sector.
Another topic is the impact of the European Green Deal and EIOPA climate regulations. Environmental factors are a priority for the Polish supervisor, and climate change stress tests have started to be carried out. IFRS 17 is the cherry on the top of the regulatory cake. Fortunately, the perseverance and determination gained during qualification mean that Polish actuaries are well positioned to help clarify the picture.
Monika Lis is an actuarial manager at Milliman
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