· In 2026, the global market's value for incomeprotection insurance is projected to exceed $46 billion, with Europe playing a pivotalrole in its development, according to Market Data Forecast.
· In Poland, this category still belongs to the niche market, but it is gaining popularity year after year, with Leadenhall Insurance reporting a 23% year-on-year sales growth.
· Entrepreneurs and self-employed professionals mainly use insurance protection, including doctors, IT specialists, and seafarers.
· The policy provides a payout of up to 65% of income after an accident or due to illness if the insured person's health prevents them from performing their previous job.
The income protection insurance market is projected to grow at 3% annually. It is expected to reach a value of $46.1 billion in 2026, according to analysts atMarket Data Forecast in their report "Global Income Protection InsuranceMarket." They believe that insurers from European countries will experience the fastest growth. Income loss protection is already available in Poland but currently represents a small fraction of the market. It is classified as one of the various types of financial risk insurance. According to the Financial Supervision Authority (KNF), it accounted for just over 2% of property policies sold in the domestic market, with premiums amounting to 866million złoty at the end of Q3 2022.
Trends observed in other countries often reach Poland with a slight delay.There are indications that the same will be valid for the popularity of income loss insurance, which Western markets are much more saturated with. However, in recent years, we have seen double-digit growth dynamics at a rate of 23%year-on-year. The insurance is primarily chosen by self-employed individuals -in the form of sole proprietorships - who generate their income through contracts, commission agreements, or work agreements, especially representatives of so-called liberal professions. Doctors, IT specialists, or seafarers employed on foreign contracts are looking for security in Poland. It is also important to note that only recently have products matching the level of offers available in Western Europe become available in our market,"says Rajmund Rusiecki, Vice President of the Management Board at Leadenhall Insurance.
How does income loss insurance work?The policy compensates for the income from the primary source of livelihood if the insured person loses it due to an accident or illness. The product is primarily targeted at entrepreneurs and self-employed individuals for whom the inability to work means the necessity of living on the lowest, insufficient benefits from the Social Insurance Institution(ZUS).
For the affected person, such as an entrepreneur who used to earn PLN 15,000per month before losing the ability to practice their profession, an allowance of approximately PLN 2,000 results in a significant decrease in income and financial burden after that. The cost of living, in most cases, increases due to expensive treatment and rehabilitation. Furthermore, an accident or illness does not exempt one from the obligation to meet existing commitments, such as loan instalments, rent, or children's education- notes Rajmund Rusiecki from Leadenhall Insurance.
The main risk covered by the policy is total temporary incapacity to work, i.e., a state that does not exclude a return to the profession. Typically, a benefit of up to65% of the average monthly income from the last year can be received for up to2 years. The coverage can also protect against life-long incapacity to work -in this case, the insurance provides a payout, for example, ten times the annual income. Another policy component may be protection for the closest dependents in case of the insured person's death or disability.
When purchasing coverage, paying attention to the value of the benefit that can be received after a loss is essential. It is also worth asking, among other things, how the insurer defines 'incapacity to work.' The loss of income should apply to a specific profession stated by name rather than the ability to perform any gainful employment. Only then will the insurance fulfil its role by compensating for earnings at the level of the previous industry? Of course, the benefit from the policy does not exclude the simultaneous pursuit of other work that the health condition of the affected person allows," adds Rajmund Rusiecki.