Freedom to Define Membership in a Mutual Insurance Company

A mutual insurance society is one of the basic forms of conducting insurance activity. It is characterized by a very wide range of options which its founders and subsequently entitled members have in order to choose the organizational and systemic model of operation, to change it in the course of business, to define the concept of membership, to create various categories of members and provide them with different rights and duties, to determine the powers of statutory bodies, and, above all, to apply the method of mutuality. The Insurance and Reinsurance Activity Act regulates the basic legal framework of mutual companies, while referring quite a number of issues to the Polish Commercial Partnerships and Companies Code. This does not alter the fundamental principle on which the company's activity is based, namely that its articles of association play an extremely important role, which is much greater than in the case of public limited liability companies, and that members of a mutual insurance society enjoy considerable freedom to conduct business and categorize its members, which is unparalleled for other legal forms of business activity.

Taxation of Insurance Premiums in the EU Cross-Border Insurance Business

As in many other cases of business activity, the performance of insurance activity involves various types of tax charges. Insurance contracts, having been excluded from the scope of value-added tax at the EU level, are subjected to taxes specific to insurance activity, namely insurance premium taxes, which are discussed in the article. However, insurance premium tax regulations are not harmonised at the EU level and vary immensely from one country to another. In fact, in some EU countries, including Poland, no such taxes have been implemented whatsoever. The issue discussed in the article is related to the fact that an increasing number of insurance companies perform insurance activity on a cross border basis. From this point of view, although there is no such tax in Poland, it may be of great importance to Polish insurance companies that insure risks located outside Poland. The regulations concerning the insurance premium tax depend on internal decisions of individual European Union countries, both in terms of the introduction of such tax, exemptions, and rates, and they may differ significantly across those jurisdictions. Due to the nature of cross-border activity and the rules on the localisation of the risk associated with the taxation of premiums, it was not clear whether and to what extent, in the case of insurance of risks located outside Poland, a tax obligation arises in respect of insurance premiums. These questions were addressed by the Court of Justice of the EU in several cases (C-118/96, C191/99, C-243-11). The CJEU decisions have revealed the multifaceted complexity inherent to the taxation of cross border insurance contracts.

Insurer's Performance in Unit Linked Life Insurance Plans

The aim of the article is to comprehensively discuss the performance to be made by parties to the unit linked life insurance plans (ULIPs), with a particular emphasis being placed on the performance on the part of insurance undertakings. The specific nature of this contract results in various types and methods of paying benefits in unit linked insurance plans. Due to the lack of detailed legal regulations in this area, it seems reasonable to present legal characteristics of the particular types of benefits. Determination of the amount of latter, taking into consideration first and foremost the investment nature of the contract, which makes it different from common life insurance policies, requires a thorough discussion in ULIPs.

Violation of Recommendations Issued by the Polish Financial Supervision Authority as a Basis for Imposing Sanctions Pursuant to Article 362(1) of the Insurance and Reinsurance Activity Act of 11 September 2015

Pursuant to Article 361(1) of the Insurance and Reinsurance Activity Act of 11 September 2015, the Polish Financial Supervision Authority (PFSA) may issue recommendations for insurance and reinsurance undertakings. In the case of non-compliance, such recommendations may give rise to the imposition of administrative sanctions. The purpose of the article is to decide to what extent the violation of supervisory acts, such as the PFSA’s recommendations, determines the administrative liability of insurance and reinsurance undertakings. Furthermore, the article aims at discussing to what extent a breach of non-authoritative acts of a supervisory nature, such as the PFSA’s recommendations, may constitute the basis for administrative liability provided for in Article 362(1) of the Act. The author conducts his analysis in the context of constitutional standards applicable to administrative responsibility. Those standards are compared with the decisions of the PFSA rendered as a result of the violation of its recommendations. In addition, the article presents de lege lata and de lege ferenda conclusions which relate to ensuring compliance with constitutional requirements of the procedure for sanctioning violations of recommendations issued by the PFSA.

Purchase of a Leased Vehicle by a User Who Has Concluded a Motor Third Party Liability Insurance Contract

The article focuses on the interpretation of Article 31(1) of the Act on Compulsory Insurance, the Insurance Guarantee Fund and the Polish Bureau of Motor Insurers as regards legal consequences of the purchase of a vehicle by its user in the performance of the leasing contract, with the user having previously taken out a motor third party liability insurance. The article contains a polemical analysis of the position of the Polish Financial Supervision Authority of 11 February 2021.

The Principles of Reinsurance Contract Law. New Quality of Reinsurance Contracts

The article presents an international project on reinsurance contract law: The Principles of Reinsurance Contract Law (PRICL), and assesses its potential practical application, also from the perspective of Polish market. The analysis of current problems arising from reinsurance contracts, i.e. legal uncertainty as to the law applicable and contractual relationship, explains the rationale behind the PRICL and stresses their importance. The arguments presented in the study are supported with the particularly vital practitioners’ voice. Furthermore, the article considers technical aspects of the PRICL application, such as their legal efficiency in court proceedings.

Environmental Liability – Tools to Mitigate Financial Consequences of Environmental Liability through Insurance

This article focuses on environmental liability insurance of entities using environment against damage caused as a result of their activity. An insurance contract may be the most optimal form of securing claims related to an imminent threat of environmental damage. As a rule, entrepreneurs have freedom in choosing the scope of insurance and in deciding whether to conclude an insurance contract or not. However, for certain types of activity, operators are required by the legislator to have financial protection covering possible environmental damage. Moreover, the article discusses the basic principles of environmental liability and the possibility of insuring this liability, including the cases of statutory obligation to be financially protected. Finally, it evaluates the effects of introducing compulsory environmental insurance.

About the Need to Define Uniform Rules for the Operation of Insurance Guarantee Schemes in the Event of Insurer's Bankruptcy in the European Union

The European Union has been working for years to establish uniform rules for the operation of insurance guarantee funds in the Member States. They are the equivalents of the Polish Insurance Guarantee Fund. The rules should increase the protection of consumers, i.e. policyholders and the injured. However, it has not been decided yet who will actually be protected by the new regulation, namely whether these will be all the insured or only those who have concluded a compulsory insurance contract. Will all Europeans be protected in the same way or only residents of individual Member States? What is more, the ultimate cost of the systemic changes to be introduced into the Polish market is also unknown. If the system applied to numerous business lines and covered natural persons as well as small and medium-sized enterprises, insurance would certainly become very expensive, leaving many Poles without protection. This article aims to familiarize readers with the current state of legislative works as well as the directions for the development of systemic changes.

Importance of the Amendment of the Act on Compulsory Insurance and the Act on Insurance and Reinsurance Activity of 28 May 2020

The Act of May 28, 2020 amended the Act on Compulsory Insurance, the Insurance Guarantee Fund and the Polish Motor Insurers’ Bureau as well as the Act on Insurance and Reinsurance Activity in order to introduce efficient mechanisms and instruments to supervise foreign (re)insurance companies from the European Union Member States other than the Republic of Poland pursuing activity on the territory of Poland through a branch or in any other way under the freedom to provide services. This amendment under which the Polish Financial Supervision Authority (KNF) obtained new powers towards these entities introduced a significant change to the legal system. The KNF has been empowered to apply certain sanctions (fines) for exceeding statutory deadlines for the payment of compensation by foreign insurers, and in particular it may apply the prompt intervention mechanism if it proves necessary to remove irregularities immediately, without having to notify the competent home state supervisory authority beforehand and having to wait for its proper response. In this case, the KNF will be authorised to apply all the powers to which it is entitled towards domestic (re)insurance undertakings.

The Impact of Sustainable Finance on Insurers’ Activity

The article contains an analysis of the impact of the sustainable finance provisions either currently being developed at the European level or already partially implemented on the activities of insurance companies. These regulations will affect insurers’ activity as they play an important role in adapting the EU economy to climate change, above all, acting as long-term investors and risk managers, but also through appropriate management of the provided insurance cover. At this stage, the system seems to be quite complicated. The adopted sustainable finance regulations impose a number of obligations on insurance undertakings, particularly those offering insurance investment products, e.g. additional disclosure obligations, either general or addressed to individual clients. Moreover, insurance companies will have to comply with the restrictions on their investment policy. Besides, it should be emphasised that the adopted solutions do not fully consider the specific nature of insurance activity or individual character of national EU economies. As a consequence, the introduction of the sustainable finance regulation will certainly pose a significant challenge for insurance companies operating in Poland.