Refusal to renew an insurance policy by the insurer on the example of tourist services – analysis of Polish law

Publication date: June 06, 2023

Pursuant to Art. 7 (2) of the Act on package travel and linked travel arrangements, there is an obligation to conclude an insurance contract in a specific amount. This provision provides that statutory obligations are fulfilled by tour operators and entrepreneurs facilitating linked travel arrangements by:

1) conclusion of a bank guarantee or an insurance guarantee in accordance with the template form and the provisions specifying the minimum amount of the guarantee sum or

2) conclusion of an insurance contract for travelers inaccordance with the form template and the provisions specifying the minimum amount of the sum insured, or

3) concluding a contract for a travel escrow account in accordance with the model of this contract and accepting travellers’ payments only to this account, if they provide package travel or facilitate the purchase of linked travel arrangements provided only on the territory of the Republic of Poland;

4) making timely payments of contributions in the due amount to the Tourist Guarantee Fund.

The content of this provision shows that having such insurance is an obligatory requirement for every company dealing with tourist services. In addition, there is a requirement to provide the locally competent marshal of the voivodship with evidence of the conclusion and continued validity of the relevant security in order to remain entered in the Central Register of Tour Operators and Entrepreneurs Facilitating the Purchase of Linked Travel Services. Therefore, in order to legally provide tourist services, an entry in this register must be obtained. This implies that such insurance belongs to the catalog of compulsory insurance and it is the regulations concerning this type of insurance that will be binding as a special law in relation to the general regulations of the Polish Civil Code.

According to Art. 4 of the Polish Act on Compulsory Insurance, the Insurance Guarantee Fund and the Polish Motor Insurers’ Bureau, compulsory insurance is:

1) third party liability insurance of motor vehicle owners for damage caused in connection with the use of these vehicles, hereinafter referred to as “motor third party liability insurance”;

2) farmers’ third party liability insurance for owning a farm, hereinafter referred to as “farmers’ liability insurance”;

3) insurance of farm buildings against fire and other fortuitous events, hereinafter referred to as “agricultural buildings insurance”;

4) insurance resulting from the provisions of separate laws or international agreements ratified by the Republic of Poland, imposing an obligation on certain entities to conclude an insurance contract.

According to Art. 22 section 1 of the same Act, in the event of a legal relationship resulting from an insurance contract not regulated separately in a special act, the provisions of the Civil Code will ultimately apply. This provision provides that the provisions of the Civil Code shall apply to compulsory insurance contracts in matters not covered by the Act.

There is one key regulation from the Act on Compulsory Insurance which significantly affects the discussed legal problem. This is the regulation of Art. 5 of the Act in question, which states that the policyholder concludes a compulsory insurance contract with a selected insurance company that conducts insurance activity within the scope of this insurance, whereas an insurance company authorized to conduct insurance activity in groups covering compulsory insurance may not refuse to conclude a compulsory insurance contract if as part of its insurance activity, concludes such insurance contracts.

Therefore, this provision can be interpreted in such a way that withdrawal from a permanent contract, tantamount to a refusal to conclude an insurance contract, may be considered inconsistent with the legal provisions.

However, a distinction should be made between the termination of a contract concluded for an indefinite period and the refusal to conclude a new insurance contract for a subsequent period. From this perspective, it is necessary to assess the possibility of the insurer’s refusal to conclude an insurance contract due to the insurance risk assessment, change in risk assessment due to the market situation, unfavorable economic conditions. However, it is subject to evaluation and is subject to verification and analysis in each factual state, along with the provisions of the general terms and conditions of insurance and the insurer’s regulations.

It seems that the insurer may refuse to sign another insurance contract only for important reasons which it is obliged to communicate to the contracting party – the policyholder, or if the policyholder has failed to pay the agreed insurance costs.