The new regulation was signed on July 19th, 2019, and comes to fix the problem of insurers' liability level from the past years, much lower than today's ones. In some cases, the victims would not receive a fair amount of compensation for their material damage of physical trauma, due to the exhaustion of insurers' funds, that reached the limits mentioned in the insurance contract.
For example, in year 1991 the level of indemnity limit was around PLN 720,000, increasing year by year to EUR 350,000 in year 2005. To this day, Poland's MTPL compensation limits have greatly increased compared to the limits in the past, as an effect of country's alignment to European Union legislation.
According to the new regulation, the accident victims that have met the exhaustion of the liability funds of the insurer in charge for their indemnity can now apply to UFG's new benefits, under the form of pensions, depending on their current situation. UFG believes that these benefits will be especially useful to those involved in a car accident at a young age, who suffered serious injuries and are now unable to make decent earnings due to their handicaps.
"The solution we've adopted will not constitute a significant burden on the UFG budget, being financed from the revenues that we currently obtain (...) UFG is in a very good financial condition," said Elzbieta WANAT-POLEC, President of the UFG.
UFG estimates that the fund will face an extra cost of PLN 15 million per year for the following decade, due to the new changes. Currently, UFG has over 900 pensions in its portfolio. In 2018 only, UFG paid a total of PLN 100 million as disability benefits and damages done by uninsured/ unknown drivers. Polish Financial Supervision Authority (KNF) estimates a total of 300 MTPL cases in which the insured sum has already reached the indemnity cap (about 25% of them) or will be depleted in the next 10 years (the rest of them).
"Thanks to the new regulations, UFG will free insurance companies from potential unexpected costs for which they could not collect in premiums at the time, because of the in-force regulations, which did not mention the payment of benefits beyond the guarantee sum (...) The new act imposes on the whole insurance market the necessity to participate in its financial effects. Until now, only those insurance companies, which due to historical conditions, have the most liabilities in liability insurance policies with low guarantee sums in their portfolios, have borne the burden of exhausted guarantee sums," emphasized Slawa CWALINSKA WEYCHERT, Vice-president of the UFG.