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Interactive navigation is a tool that goes beyond the standard navigation of the integrated content (available in the report drop-down bar). New approach allowed to navigate in the two additional business dimensions of the PZU Group, i.e .:
- strategy (insurance, health, investments, finances);
- sustainable development (sales, employees, social responsibility, natural environment and ethics).
The above-mentioned areas were additionally supplemented with related GRI indicators, within each selected issue.

Products and adaptation to climate change

Annual Report 2018 > BUSINESS > ENVIRONMENT > Products and adaptation to climate change
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Best Pratices in PZU
What action do you take to reduce your adverse impact on the environment, including by reducing CO2 emissions and the consumption of fossil fuels as forms of indirect impact?
Comment made during a dialogue session

The PZU Group is aware of the fact that the provision of insurance, banking and investment services is an area in which decisions of individual companies may influence client behaviors and is aware of the bearing they may have on the natural environment. In respect of large clients, such as industrial plants, engineering underwriting is performed to enable the insurer to calculate the premiums. A detailed outcome of the underwriting exercise along with full risk assessment and scenarios are presented to the client. The underwriting covers business risks, which are often combined with environmental risks. For this reason, the actions taken by the client to eliminate or reduce certain elements of its risks, even if induced solely by an attempt to suppress insurance costs, contribute to diminishing the risks to the environment or humans.

The PZU Group participates in social dialogue and debates on sustainable development. As part of the Climate Summit (COP24) organized under the auspices of the United Nations, the PZU Group was one of the organizers of the City Day. The panel discussion moderated by PZU was entitled “Diagnosing the current state of the natural environment and forecasting changes in its quality”. The topics of other meetings included decarbonization of urban and road transport, adaptation to climate change in urban centers and challenges associated with climate change.

Climate change risk management in the PZU Group

The PZU Group keeps monitoring the activities and initiatives undertaken by financial institutions and international organizations. Among them are the United Nations (UN), the Organization for Economic Cooperation and Development (OECD) and the European Commission.

A key initiative for European insurers is the Climate Agreement entered into by 195 countries in Paris in 2015. Its provisions include the disclosure and management of risks related to climate change in the financial sector, including recommendations issued by the Task Force on Climate-Related Financial Disclosures (TCFD). In turn, from the perspective of limiting natural disasters, the point of reference is the “Action Plan on the Sendai Framework for Disaster Risk Reduction 2015-2030,a disaster risk-informed approach for all EU policies”.

Regulations requiring that climate change risk be taken into account in the business of financial institutions, including insurance companies, have also been developed by the European Commission. For several years now, organizations doing business in the financial sector have been gradually withdrawing from providing funding or insuring coal and energy companies and projects. It is expected that the financial sector will provide increasing support to real sectors of the economy, especially power generation, transport and industry, in reducing climate change caused by greenhouse gas emissions.

In Poland, the potential impact of climate change in the coming decades will result from a combination of the following two factors:

  • Exposure to climate risks of a physical nature. According to scientific research, floods and cyclones are the most serious risk factors in Poland. In recent years, the risk of heat waves has also emerged. Climate change affects the frequency and scale of potential catastrophic events that may exert a significant impact on the capital position in the insurance sector.
  • Sensitivity of the country to changes and events related to the climate and resulting from such factors as population density in high flood risk areas, transport infrastructure quality, water management and funds earmarked in the state budget for unexpected expenditures.

These two factors, combined with the country’s adaptability, including those of the public sector (central and local governments), companies and citizens, the health condition and the place of residence, will define the resilience of both the country and the PZU Group’s clients to climate change.

The PZU Group takes a number of initiatives to boost the resilience of both country and its clients to climate change. 
This is done by:

  • improving the recognition of exposures to climate risks of a physical nature,
  • supporting the enhancement of adaptability and social awareness.
Country’s resilience to climate change

Source: Prepared based on World Bank (2010), Adapting to climate change in Eastern Europe and Central Asia, Washington D.C.


“It is worth paying attention to the company’s involvement in aid actions such as the provision of aid to people affected by natural disasters.”

Comment made during a dialogue session

The PZU Group regularly updates its databases containing details of weather events that occurred in the last 20 years (augmented with information on floods and cyclones). Furthermore, the PZU Group analyzes damage events broken down by geographies (interactive high resolution floodplain maps for Poland are being developed allowing for various flood scenarios). Early warning systems against floods and other events are also being improved (mass social campaigns and information campaigns are carried out to raise awareness among the Polish population).

Areas to which alerts were most frequently directed in 2018 broken down by weather phenomena

Areas to which alerts were most frequently directed in 2018 broken down by weather phenomena

Remote sensing

As many as 28,000 cases of damage in winter agricultural crops are reported annually to PZU. Total claims paid on this account may reach nearly PLN 250 million. In order to carry out a proper valuation of such damage, PZU uses an innovative remote sensing method – maps of agricultural crops are superimposed on aerial photographs taken by planes and drones. This activity accelerates the claims handling process. Its additional advantage is that the findings are unbiased.         

PZU manages its indirect impact on the natural environment through the insurance products it offers:

Counteracting climate risks Examples of actions taken by the PZU Group
Reducing greenhouse gas emissions
  • Introducing new insurance products for renewable energy source (RES) installations. The PZU Group is the insurer of Poland’s largest wind farms (Energa, Enea, PGE) and hydroelectric power plants (Energa, PGE). The insurance covers fire, floods and other calamities as well as loss of profit during operational downtime or loss of machinery. Extension of RES capacity is also included in the insurance cover. 
  • Insurance programs for municipalities that provide financial support to entities investing in RES installations. The selection of residential insurance products on offer is updated with new solutions covering alternative energy sources, such as photovoltaic modules, solar collectors and heat pumps. Not long ago, the PZU Group introduced new insurance products for Tauron’s clients who own photovoltaic microinstallations. These products protect them against the destruction of their installations by such insurable events as hail, fire, snow or other random events, and guarantee the disbursement of compensation for consequential financial losses. 
  • Insuring upgrades in conventional power plants (resulting in a reduction of exhaust emissions by desulfurization or denitrification installations or filter systems) and thermal waste neutralization installations. The PZU Group also insures investments aimed at improving energy efficiency in various sectors of the economy. 
  • Supporting initiatives aimed at the development of electrification in the transport sector, for instance by insuring a large number of Intercity trains and all rolling stock of Koleje Mazowieckie. The PZU Group is also establishing cooperation with Electromobility Polska and other companies that either already install or intend to install quick chargers for electric cars.
Adaptation: better understanding of risk factors
  • Catastrophic risk management with a particular focus on the risk of floods associated with terrain characteristics and the number of surface watercourses. Within the framework of this system, the PZU Group runs periodic analyses of its exposure to natural disasters. 
  • The insurance portfolio is broken down into zones according to specific degrees of exposure to the risk of floods (river floodplains and areas behind flood embankments) and cyclones. Each such zone covered by the analysis is assigned a value of potential losses corresponding to the assumed probability levels. Also generated are scenarios in which the scale of natural disasters observed in the recent history of Poland is greatly exceeded. 
  • Annual introduction of changes in the frequency and scale of catastrophic events and their occurrence in the design of the reinsurance protection program.
Adaptation: customizing the product offer to the risk factors
  • Some weather scenarios form is the basis for the construction of the reinsurance program and for the calculation of capital requirements. The capital requirements provide a guarantee that even in the event of catastrophic floods or cyclones, the PZU Group will have the capacity to pay its liabilities to clients. 
  • A customized insurance offering for sectors of the economy exposed to the highest climate risks, such as agriculture. 
  • Offering residential insurance in every location without any exclusion zones. As the market leader, the PZU Group offers insurance products with a comprehensive cover of private property without the need to pay any additional premium and without applying any limitations of liability for such risks, for instance in the grace period or deductible. 
  • Tailored approach to underwriting and offering insurance for industrial buildings and infrastructure. 
  • PZU offers reinsurance of natural risks for annual periods with a non-proportional structure. Whenever a reinsurance program is renewed, the contract structure, information about the insurance portfolio and the loss history are updated. Every year, PZU models and quantifies the risks of floods and cyclones in Poland offered by reinsurance brokers. 
  • As part of its insurance products that cover business property against fire and other calamities, in the event of risk materialization the PZU Group pays compensation after the damage has occurred coupled with additional conditional financial support for activities related to damage prevention, damage reduction or participation in a rescue effort or property repair. Moreover, as part of its cover against lost profits, PZU protects businesses whose revenues decline, for instance as a result of damage to their assets caused by fire, flood, cyclone or other random events. Such insurance helps such businesses maintain their financial liquidity if unexpected events occur. In turn, commercial undertakings covered by general third party liability insurance may extend their cover with two clauses providing protection against damage to the environment. The first such clause extends the third party liability insurance cover to include losses arising in connection with the release of hazardous substances into the air, water or soil. The second clause extends the insurance cover to include liability for damage to the environment. Such clauses are offered predominantly to industrial operators (in the chemical, petrochemical and manufacturing industries), construction companies, utilities (power plants and cogeneration plants), wastewater treatment plants and waste management companies.
Adaptation: innovations to protect the future
  • Advisory services for farmers on new climate-resistant varieties of crops. For two years, the PZU Group has been running an information campaign targeted at farmers to promote winter rapeseed varieties recommended for cultivation in the Polish climate, using lists that are updated and published annually by the Central Research Center for Cultivar Testing (COBORU). 
  • Use of risk verification tools, including remote sensing. This tool makes it possible to obtain information concerning facilities or areas from a distance, most frequently by using sensors installed on aircraft or satellites facilitating the measurement of reflected and emitted radiation. In agriculture, the vegetation coefficient is also used as a very popular and proven method. 
  • PZU Lab carries out audits and issues recommendations for various companies aimed at improving their safety in terms of assets, downtimes, human safety and the environment. The Group has established cooperation with institutions of higher education and develops knowledge in the field of energy engineering. 
  • Link4 and Skywarn Poland - Polish Storm Hunters have given clients holding real estate insurance access to a weather alert system. Clients receive a text message containing a warning and a website link where they can read about how to protect themselves against the adverse consequences of various weather events. The reception of this service has been positive with fewer than 1% of clients discontinuing it has inclined the firm to make a similar service available in 2019 to motor insurance clients. It can be expected that weather warnings will exert a measurable contribution to enhancing road safety and reducing the number of accidents.

The PZU Group’s insurance business is aimed at offering insurance products tailored to the needs of both individual and corporate clients in various sectors of the economy. The Group’s highest priority is to properly respond to the current needs of the Polish market and economy in accordance with national and EU regulations (including those safeguarding the principles of fair competition and permitting cooperation only with those business clients whose activity, according to PZU’s knowledge, complies with the applicable laws). The complexity of needs, and - consequently - of the offer, has led PZU do provide, inter alia, insurance cover to entities in the mining and power sectors. Besides traditional operations based on coal, clients from this group also develop their activities in the area of renewable energy sources. The PZU Group plans further development of policy and practices in the area of indirect environmental impact, abiding by sectoral trends and the specificity of Polish economy.


Environmental guarantee 

The PZU Environmental Guarantee offers support to businesses, both natural and legal persons. The guarantee is a commitment to pay a specified compensation if the company to which the guarantee has been granted fails to remove adverse environmental effects of its business operations. The beneficiary of this guarantee is the environmental protection authority issuing the relevant administrative instrument giving a permit to use natural resources, e.g. the marshal, provincial governor (voivod) or county governor (starost). 

The guarantee offers a form of protection to companies whose activities may have an adverse impact on the environment, e.g.: 

  • chemical plants, 
  • companies dealing in trans-border movement of waste, 
  • municipal services plants. 
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