Good afternoon, ladies and gentlemen. I would like to welcome you to our quarterly conference and presentation of our group's financial results. So, in the beginning, I would like to propose the following formula for today's meeting. I suggest we focus on our results only or mostly. I'm sure you will have questions about the past, but we have one and a half weeks before we announce our strategy, and at that meeting, we would like to address your questions regarding the past. Of course, it's not that we are trying to avoid answering any of your questions, but I do believe that for the sake of more order, it would be useful for us to focus on the results today because there is only so much information we can present today. So, of course, you're all welcome to come on December 2nd.
I do hope you have already received invitations. Our company will have a meeting for the markets, for different stakeholders, then for the employees as well, so all this lies ahead, and today, I would like to focus on the results. Before I do that, however, I would like to address the following issue. For the last six months, we've been working very hard on our strategy as well as many challenges faced by our group. These were some issues connected to the current situation, the fact that many new people have joined our company over the last six months. There were several challenges regarding our operational model, the structure of our assets, the role of banks in our group, the question about where they should be positioned in our structure. These were some of the challenges.
Another challenge was connected to the motor insurance market, a challenge we had to address immediately. It had to do with inflation level, pricing level, and other challenges, which I will discuss later in more detail. In the meantime, there were some huge events that were independent of us, for example, the weather-related challenges, which strongly affected agricultural insurance, and the third quarter was also strongly marked by the challenges posed by the flooding in Poland. I will address this issue in more detail later, so the results I would like to present to you are revenues reaching almost PLN 22 billion insurance. This is almost PLN 1.9 billion more than last year, so this is a growth that's better than decent in health insurance, a growth by 11%.
A very important part of insurance for us is non-motor insurance, where we've had a growth of more than 15% and almost 9% growth in motor insurance. The main challenge here is profitability and our operational efficiency. Profitability: PLN 3.7 billion, AROE almost 17% after three quarters. The results of quarter three, despite all these predictable events, which I'll comment on in just a moment, amounts to almost PLN 693 million and PLN 1.215 billion in the growth of the dominant company. I think it's positive news because we are above the market consensus, despite the fact that it's considerably lower than last year. But last year was a record year. It was a year without any severe unexpected events, and many factors have contributed to this development. But let's address what's here and now and talk about the future as well.
So, very strong capital position, which I'll also discuss in a moment, and unshaken by the catastrophic events, the extreme weather events in the recent two quarters. Dividends, as you know, all about dividends. I'm not going to spend much time on this subject. After the top line and the revenue, we've already discussed it too. The next driver of the development was non-motor insurance, corporate insurance, also property insurance, especially of apartments. 90% growth in the health pillar, very positive. A bit of news as well, and very soon, I will tell you a little bit more about life insurance, where we have also reported very solid results, very positive results. Jarek Mastalerz will tell you about the predicted developments. Also, increasing assets of external clients and TFI and PTE, a growth of almost 26%, a very important contributor to our results. We have banks.
Banks have already reported on their results, also above market consensus. Bank assets, almost PLN 494 billion. So, a very strong contributor to our result. Pekao S.A. and Alior both are above the market consensus or the plan, which positively affects our quarterly results. Now, as regards the reasons to the main decreases year- on-y ear, so just take a look at the weather events. In quarter two, agricultural insurance strongly affected and flood in quarter three, and we can divide it by half, really. It's 50/50. They both affected this year's results in 50%. Now, when you look at the results of Q3, we will see some one-off events connected to some past decisions. So, write-off for investment Olefins, 100 million PLN. I will comment on that in more detail a little bit later. So, these are some factors that are caused by some external situations.
Now, looking at our core activities, core business operationally, it would be mostly flood. And in terms of technical issues, insurance, the main contributor is motor insurance, which I will discuss in more detail: operating margin more than 24%, almost 24% combined ratio, so this deterioration is directly connected to the previously mentioned three elements. So, the flood, agricultural insurance, and motor insurance, and I think it will require some more explanation, but in a moment. A very important issue, our capital position and solvency ratio, 233% higher than market average, so we are way above our peers. We're safe and well-built informed investment portfolio with 62% represented by sovereign bonds and effective reinsurance. Effective reinsurance was significant as well because today it affects our result despite the figures connected with the flood, which I will give in more detail in a moment. The influence was significant, but not overly.
So, it did not significantly affect our stability or results. One of the first decisions we made in mid-year without even knowing the flood will come, we changed our reinsurance program in terms of high exposure to catastrophic risks. We increased our security level. We have a very fine share of endowment insurance in order to be prepared for large events. The first information we received about this event was alarming. It was said it may strongly affect our result. It turned out not to be true in the end, but of course, for the people directly affected, it was a tragic event, no doubt about it. Now, a few words about the flood operationally and what we did.
There are three dimensions: the financial dimension, probably the most interesting one for you right now, but there's also an issue of our company's agility, which we were able to show in a critical moment, and third, what conclusions do we have for the future? Because there are some specific conclusions, and it will affect the way we view the market and also some insurance of catastrophic events, etc., so we are very agile. We responded very quickly. In general, our state reacted very quickly. We were informed very quickly and very accurately. We had information about the amount of water. So, the information was much better than what we remember from the '90s because the first signals were really dramatic, and we received the first signals several days before the floods started, so it was between 12 and 13 of September, and already then, we established crisis teams.
We had our educational material. We were prepared, and the expectation was that we were affected in billions. What would we do? Before the flood started, we sent warnings to all our clients, informing them about how they can contact us if they have any claims in order to reduce the level of confusion in the future because we are afraid of the operational risk if people don't know which number to call, etc. When the critical flooding came, after two or three days, we were there on site with our mobile field claim handling centers, and we started paying the first prepayments on the 15th, 16th, and 17th. Once the flood wave has passed, we are prepared to handle claims.
We also decided to change the approach to claim handling, moving away from the traditional process when you send documents away to expert opinion, and it takes a dozen days or longer. We actually authorized our employees to pay for the claim also in its entirety very soon. The highest payments reached a level of PLN 500,000 were paid overnight. It was a non-standard approach compared to the classical approach because, of course, you wait for the water levels to drop, then you estimate the losses, etc. We are really concerned that if we keep the traditional approach, we will have to repeat the work twice. The effect we reached with this decision was very positive, which surprised us. We already paid out PLN 400 million in claim settlement. Therefore, the maximum amount that we might need to pay out is PLN 275 million.
And the information that you have in the table on the left-hand side is very important because we are dealing with a cohort of claims that amounts to about 48,000 cases. This number might grow up to 50,000 because there are some delays. Currently, we are one month and a half after the flood. So, relatively still, little time happened from the natural disaster. And within this one month and a half, we have already managed to successfully handle 446,000 claims. This means that we have already made payments for those claims, and this is actually unheard of. So, what happened? The following happened. We have full access to all the information that we need. We manage the situation operationally very well. And one more thing happened. In the world of insurance, you constantly receive all kinds of complaints.
In non-life insurance, they account roughly for 7%-8% of all claims. We receive complaints for this amount of claims in a regular situation. We expected that the number of complaints would go up because there is a flood, misunderstandings, etc. We have barely 1% of complaints for all the claims handled in connection with the flood. This means that the customer satisfaction went drastically up. Our Net Promoter Score went up by a few percent over those two months. Also, the brand awareness of PZU went up by a significant number of percent, not only in the areas that were affected by the flood, but all over the country.
We take it very seriously because exactly these numbers and those facts show that we are agile, that we're reliable, and that we have a good brand, and we are able to manage a natural disaster situation. I think that this will translate into an increased number of people insured in Poland because you might be aware that the ratio of people insured to GDP is 2%-2%, and we cannot increase this ratio. We haven't been able to increase this ratio, and what is possible, that is that this is going to go up. Let us compare our situation with what happened in Spain. There was a response of the entire ecosystem. That is, there was a response at the governmental level, at the local level, and we also want to learn from their experience.
I believe that we should increase the awareness among our nationals that it really makes sense to buy an insurance policy against adverse natural phenomena, so these kind of shocks can always be used to draw lessons from them, and hopefully, this is what we'll be able to do in Poland. We got very deeply involved as our company into raising awareness and encouraging people to purchase insurance. I believe that we are in a good place to do so. We can also talk with the regulators about it. Namely, we can use the natural disaster as a good argument to encourage people to basically get insured because this also increases the resilience of the society, and the role of an insurance company in this kind of campaign is tantamount.
Of course, we also want to get involved in building infrastructure that can protect us against floods. This is very important as well, but there is no such infrastructure out there that can give 100% protection against natural disasters. We need to work with local governments as well. We should discourage people from building property in areas that are prone to flooding. Thirdly, to encourage citizens to get insured against such events. I decided to talk at length about this case study because I thought that it might be interesting for you. Now, I'd like to focus on our results in detail. I will hand over to Tomasz and then Jarosław, who will give you the results of individual business lines.
Ladies and gentlemen, you're well aware that during this part, we show PZU's performance against the market.
In the third quarter, we had a stable trend in non-life insurance that we can report a major increase like we did in the first and the second quarter. Also, non-motor insurance was growing. And actually, the dynamics, they are determined how the dynamics in other segments develops. And now, what happened in the third quarter? The gross written premium increased by almost 10%. In non-motor insurance, we had an increase by 14%. And in particular, we were benefiting from the corporate insurance. And the increase we had mainly in insurance against fire and other property damage, as well as liability insurance and assistance. The growth in the motor insurance sales can be explained by an increase in average premiums, the growth of the value of an average loss.
So, in TPL, we performed more or less like at the market level, and I will tell you more about it further on. In MOD, the increase was 7% year- on- year. And this was connected with a growing number of risks. For over the last few quarters, we've been selling more or less the similar amount of MOD and TPL policies. This is the market trend, and we're benefiting from it. And another factor that explains the increase in our revenue are increased prices. So, I believe that this specific product will continue to be profitable. Moving on, I will hand over to Jarosław.
Thank you, Tomasz. I will start with the group and individual continued insurance. The 3% growth doesn't seem spectacular, but I would like to remind you that we have a very high market share.
So, each percent of growth means that we keep our market share and that we are effectively performing better than our competitors without increasing, even though the price is going up. We have noted a major growth in individual insurance, 31%, and we hope that this trend is to stay. In the individual insurance segments, is that segment in which we have launched a pilot project on business units. And we hope that this will translate into quicker response rate and greater agility and efficiency. Actually, this is where this is headed. So, we believe that the team in individual insurance will be able to even quicker respond to market needs and to keep the growth at a stable level. And still, I believe that we can perform better in those segments. Now, healthcare, health insurance.
The revenue went up by nearly 19%, and the number of insured went up only by 2.5%. So, here, this is clear, the increase in revenue is a clear effect of increased prices. So, we managed to convince our customers to pay a higher premium, to pay higher premiums, and the inflation of healthcare costs that was contributing to the profitability of those products. Well, let's say that it was accepted by the market. So, we believe that this specific product will continue to be profitable. Probably, we will not significantly change the strategy. We might change our approach to how we manage the healthcare pillar. We want to keep our current market share, growth rate, and profitability because this is a product that is very price-sensitive.
It's strongly affected by inflation because as the cost of healthcare services go up, well, the premium also has to go up. Gross written premium raised by PZU through cooperation with the banks went up by 61% year- on- year. In particular, we worked with Pekao Bank and with Alior Bank. Assur banking segment, well, this is the segment that never lives up to its expectations, not only in PZU, but also globally. Thanks to close cooperation, the banks that are in our group won the clients and the revenue of PLN 2.4 billion. This is actually not the revenue, but this is the total customers' loan and deposit acquired by PZU. Now, the assets that are managed by our group, they registered an impressive growth, over 30% compared to the last year.
We have a significant increase in the investment funds that we manage and a slightly smaller increase in the pension funds, but this is often the case, and we did not have a lot of room for maneuver in that regard. We managed to win 9% of the market share with our investment fund management company. This is the best result of a fund that is not managed by a bank, and I think that's it. I can hand over back to Tomasz.
So I will give you a brief overview of our standing after the third quarter. I would like to once again stress that we had a good result as far as sales and revenue go. We managed to achieve it by effectively reaching out to our customers both this year and at the end of the previous year.
We have carried out a number of acquisitions that allowed us to reap benefits from them in individual segments of insurance. So, we should analyze this data in the context of the last 12 months. So, in our gross insurance revenue went up by 8.6% year -on- year. In particular, the non-life insurance, the growth was at 9.6%. Corporate insurance, there we had a double-digit, almost 13% growth. In life insurance, we also had a major growth, about 7.5%, in particular in the individual insurance segments. Non-life insurance, 5.6% growth. Internationally, this was affected by the Ukrainian market because this is a difficult market, especially for life insurance. Higher reinsurance, higher percentage of assignment. So, reinsurance, which allows us to optimally manage profitability, and it worked very well, especially in Q3.
For this reason, in terms of net revenue, so after the assignment of the premium to the reinsured, the dynamics are slightly slower year- on- year. It's almost 9%, 8%. Regarding the cost, the expenses, insurance service expenses, so this quarter has been mostly affected by flooding, PLN 275 million in net revenues, and affects the performance in Q3. We've been observing increased claim ratios as regards TPL Motor. Two bits of information here. The first one, positive, we are profitable in TPL for corporate again. For this reason, in the third quarter, we can already benefit from profitability with a combined ratio below 99%. In terms of mass insurance clients, TPL, one-time event led to an increase in reserves because for calculation, we used the life duration charts from 2023, which showed that in our post-COVID reality, we live longer.
Probably these flows connected through different rate benefits will stay in our portfolio for a longer time. Maybe a high increase of PLN 40 million translates into a combined ratio of 3% growth in mass insurance. In terms of administrative costs and acquisition expenses, administrative remains on the same level. Cost of acquisition, slightly lower. Combination of these two components affects the result to a smaller extent than last year. We have higher margins on the PZU side. In terms of administrative expenses, the increase has been caused by inflation, labor costs, and different contracts that are tied to minimum wage. The minimum wage increase year- on- year mounted in total to more than 9%, which further translates into increases I've just mentioned.
The appreciation of the loss component and recognition of the loss component, these two lines, when viewed in net perspective on a comparable level as last year. To calculate this component, we look at certain events that tend to repeat, so this component is not based on one-off events such as this year's flooding. That's why we see the decrease of this component compared to Q2. Looking at financial costs and our results of our investment activities allocated to insurance segments and also when we look at the surplus, we end this quarter with the result for the dominant company in the non-bank segment to the amount of PLN 626 million , and after adjustment for the sort of contribution of the bank sector, we close this quarter with a number of PLN 1,250,000,000 . The result is allocated to PZU.
Despite a decrease year- to- year for obvious reasons, this result is higher than market consensus and higher than the result of Q2. So, we can say that in the quarter that was marked by huge challenges, we've been able to end on a positive note. Cost ratios in relation to revenue lower, high margin in life insurance, and, for obvious reasons, deterioration of the margin in non-life insurance. Going further and looking on individual segments, let's begin with mass insurance segment. We see an increase in revenue, 8.6% to product lines, MOD double-digit growth, 11.1% growth, both the price and saturation ratios compared to MOD to TPL translated to the growth we've been seeing for several quarters now on the non-motor side. Also, a considerable increase by 10.2%.
So, this is the part of our business which in normal quarter, a quarter not affected by large catastrophic events such as the flood, contributes to high returns. On the expenses side, net insurance service expenses, three main issues. So, the influence of the flooding, influence of increasing the reserves, and costs of business mainly connected to inflation, which affects labor costs and which translates into a reduction in operating result and affects the combined ratio, which reaches more than 100%. Now, from what we've been seeing on the motor insurance market, the growths continue on the TPL side. After the growth we've seen in the first six months in Q3, we report an 8% on the TPL side, slight adjustment on the MOD side, which ends quarter three at a level of 3%.
Good news because the rate and the frequency of accidents is dropping, but it is still at a higher level than it used to be. It was before COVID. Also, good news, we've seen a drop in dynamics in the growth of average claim value. And assuming that the pricing trends will be maintained, we will be able to close the profitability gap we've been struggling with. Let me add something on this subject because maybe there will be questions about that. Sometimes it's important to say some things immediately without asking for questions. Looking at motor insurance, of course, you know the contributors to what's happening in different areas before and this Q&A. We mentioned the challenges, so we've taken steps in order to reorganize Link4 in the field of to improve profitability and claim handling.
We've already seen the first positive results looking at the contribution of Link4. The loss is smaller than used to be, but it's still a heavy burden on the group performance. As regards to PZU itself, we've also made some changes in pricing in Q2 and Q3. PZU has relatively high premiums compared to the market levels. So, what we are doing today is we are making some adjustments in individual segments. In TPL, I think it was a price increase of 8% in that Q4. Despite the fact that we were starting from a different baseline, we've been able to apply a higher premium, higher by 8% year- to- year, bearing in mind that we start from a different baseline. But in order to see a positive improvement in the trend, we still need some time because that's the nature of these premiums so t hat we earn what we do today will contribute to the performance of Q4 next year.
So, what we see today is the result of the previous pricing and claims values from the previous quarters. Secondly, we've been working very hard to improve operational excellence and claim handling. A lot still remains to be done. Also, we want to improve efficiencies. I'm really hoping for some improvements connected to the new management and new and old because Tomasz Tarkowski was a head of claim handling in PZU SA for many years already. I'm sure you will see positive results of the new and old management. But Tomasz also rightly said that the behavior of the market has an influence as well. But as for market developments, we've seen positive trends. In the TPL, probably we haven't yet reached the level of pricing that many people would expect.
But it's not only about the pricing. What's also relevant is a number of other actions on our side. Looking at efficiency, average claim value, we've seen some positive signals already. Still, a lot remains to be done. I do hope for a continuation of the positive trend in Q4. I hope in Q4 it will become more visible, especially when we look at expenses for pricing and price adjustments. The effects will be seen in the next year. That's the nature of the business. What's important, however, and I think it's a very important advantage we have compared to our peers, we are not a monolinear. We are a company that's very strong in different areas. So, there is a lot we can improve by taking steps in different areas of our activity. But profitability in motor insurance is one of our priorities.
That's why we're reorganizing the operational model in order to better manage this area. So, mass insurance, mass motor insurance, mass non-life insurance will be a separate area managed by separate people who will decide about the product, the pricing, administration, service, etc. And they will also be accountable for the technical performance. Jarosław mentioned the units that have already been introduced and operate. But one of the tribes of business units will be mass insurance tribe, non-life segment with strong leaderships and strong support in terms of competence and full accountability or responsibility for building profitability.
Thank you very much. Moving on, I would like to talk to you about the corporate insurance segment. Here, we've seen double-digit dynamics, 12.6% this time. But what's even more important after the difficult third quarter in which we witnessed some really difficult mass scale events.
But we had this quarter on a positive note in the corporate insurance segment. In motor insurance and in non-motor insurance segment, we have reported strong profitability. That's the most important news. I have a few measures of the combined ratio. It reaches a level of 88% or 87%. So, in all dimensions, we can say that the profitability has been positive in Q3. Of course, we have been consistent in building scale, especially in non-motor insurance. Now, as regards group insurance and individually continued insurance, the president has already talked about it a little bit, but I would like to add a few things to explain what's behind the very high margins we've seen, the operating result and margins at level of 26%. So, this is mainly due to dynamic growth in revenue, due to higher premiums for higher expected benefits in the healthcare sector. So, that's one contributor.
Also, the administrative expenses and premiums for covering these costs in group insurance also play a role. [Foreign language] . This data shows that we can continuously improve in this area. And we also, what contributes to the insurance was, sorry, to the revenue was premiums related to acquisition expenses. What generated the main costs in insurance services? Well, the administration costs as well as growing healthcare costs. Now, I'd like to talk about the changes that we have noticed in the current quarter compared to the pandemic. So, we came back in a way to 2019. We no longer have a profit that we reported during the last few quarters. [Foreign language] . In August and September, we're at the stable level.
And then just recently, we have realized a shift in this trend, which translated into the claims ratio in that segment that are individual and group continued insurance. So, the claims ratio went up by 50 basis points compared to last year. Now, individual protection insurance and life insurance, the dynamics is similar. We've noted a growth of the contract margin. And the contract margin increased because the insurance portfolio that is a part of our cooperation with the bank went up. So, the amortization went up by 30% year- on- year. Then also, the level of premium went up to cover the expected level of expenses and claims. And on the side of the expenses, we have noticed a positive influence of the portfolio on the loss, especially in the old age benefit insurance and life insurance.
So, these are very good news both on the revenue and the expenses side. And as a result, this segment contributed well to the consolidated result. Now, CSM and the evolution of the margin. We may compare it year- on- year or quarter- to- quarter. So, whether we approach year- on- year or quarter- on- quarter comparison, you'll notice that we continue to build the value because we see some potential for further growth. We're aware that in group insurance, that the portfolio of group insurance is very mature. And in that portfolio, we'll try to keep the value high. And the area that we want to, in which we would like to build value and benefit from it in the future, are individual protection insurance. The asset portfolio in this quarter yielded 19% growth adjusted for investment products.
When we adjust the growth for investment projects, we would get at 9%. The year-on-year result is at 8.8%. Unfortunately, there is also some bad news, and Mr. Olech has already talked about it. Our valuation is lower because lifetime impairment was recognized on one of our assets. Therefore, it has a lower contribution to the valuation of our portfolio and our debt instruments capital instruments portfolio. Last year, we benefited from dividends from the portfolio of listed shares, and they also had an influence on us this year, and we also had swaps and foreign currency portfolio. There was an influence of currency fluctuation on our portfolio, especially as far as valuation of collaterals go, for instance, real property. The currency exchange rates were fluctuating in this quarter. That's why it had a major effect on us compared to last year in this quarter. Now, the solvency ratio.
The third quarter was encumbered with one-off events. Still, in the solvency ratio, we did have increases connected with the operating flows, investment results, and dividends from banks and other entities. At the same time, the scale of our activity, especially in non-life insurance, became very capital-intensive. Now, a few words about our ongoing strategy. We're on the right track. All the graphs testify to that. We are implementing our strategy. This is the very last quarter in which we continue to do so. I'd like to remind you that we announced our strategy in times that characterized by a lot of instability and insecurity. I am very glad that today, just a quarter away from closing it, we have thus far delivered a very good result. The adjusted return on equity is at nearly 16%. I'll hand over to Mr. Olech.
Ladies and gentlemen, before we open the Q&A session, I would like to address one topic. I have been at the helm of the company for the last six months. This was a turbulent period. Also, we had many changes on the level of the Management Board. This was a time of analyzing what we were doing in the past and how can we use it as a point of reference for planning our future. In a week and a half, we are going to unveil our new strategy. So, that's why I would like to briefly talk about the future. At the request of our shareholders, we have carried out a professional opening audit. We carried out this audit in a highly professional manner. We have invited renowned auditing companies to carry out this control, not one, but two companies. They published a comprehensive report.
Actually, the purpose of the audit is not to praise anybody, but to show what works so-so and what doesn't work at all. The areas that were identified as problematic or not working at all were later carefully analyzed by us. We tried to answer the question whether the cause for it was bad business decisions or difficult operating environment, etc. In order to defend the interest of shareholders, we notified relevant bodies about the audit findings. In total, we sent six notifications of that kind. I want to share this with you because I believe this is important. All the economic events that were subject to audit are present in the books. What we analyzed were procedural, whether the procedures were observed and whether the procedures, if there was any breach of procedures. Also, a number of challenges were identified.
Also, our shareholders were aware of it. The challenges were linked, among others, to the Capital Group and also the management structure. We decided to address those issues. Actually, the way we address them will be presented in a week and a half during the presentation of our strategy, namely what steps we want to take with regards to our core assets. This is one thing. Also, we have taken immediate action in those areas that had to be improved regardless of our strategy. One of them is our organizational structure. That's why we decided to introduce business units. We have already started and will continue to divide our organization into business units. We'll also have support functions that will not be part of business units. They would relate, for instance, to claims handling, etc.
We want to have groups of employees that deal with customer relations, that deal with other areas. We want to fully empower them and give them a lot of room for maneuver so that they can do their work as good as possible. And I've already said that certain things have already happened. And we're gradually approaching the implementation of the target model. We also invited a lot of managers from the market to join our management positions. Actually, PZU is currently a very attractive employer. We had a few employees. We had a few spectacular comebacks and also a number of new faces. And I'm mentioning this because this is important. Our management structure is still undergoing transformation, but it is able, even in such a moment, to respond effectively. And that's why I'm mentioning this in the context of the flood.
In total, 1,000 employees were involved in handling claims related to the flood in our organization, and I think that this paints a good picture of our company. Moreover, three years ago, you were presented with our strategy. Now, we are at the end of implementing it, and the figures show that we managed to implement that strategy in all the areas, and not only numbers testify to that. Most of the employees of the company who are still with us have been involved in that process, and that even though over the last few years, we had a lot of challenges such as the pandemic, war, inflation, adverse weather events. Despite all those circumstances, we have managed to deliver our strategy, and I think that this is a very good sign.
And especially in the context of the fact that in a week and a half, we will present our strategy for the next years. So, what I would like to share with you is the message that we are aware of our strengths, we are aware of our limitations, and we plan well and realistically. And I would like to once again invite you to the meeting in a week and a half.
So, now, if you have any questions, we are here for you. You can ask any questions about the performance or otherwise. So, are there any questions here in the room?
Kamil Stolarski, Santander. I have several questions. I'll try to be brief. So, PLN 275 million in connection with the flood. I have two questions. So, is it the legitimate amount, or do I understand correctly? And also, you said that PZU has improved its reinsurance program.
I think there was one comment that such events will repeat. What will be the effect of the improvement if an identical flood happens next year? Will the costs for PZU be lower then? And how has the reinsurance program been changed?
Yes, it corresponds with the legitimate proportion level. Of course, there can be some modifications in the future. However, our exposure, well, the answer to your question depends on the size of the possible flood. The program is built the following way. There is the legitimate level, there is the assignment of risk to reinsurance, and then co-financing above certain levels. What we've done, we've increased the first layer, so to improve our resilience for events such as the flooding. We are quite secure at the scale comparable. We've increased our level of security.
However, if we see a flood at a similar scale in the same place last year, we would be talking about losses of billions, not millions, and for this, we are quite well- prepared. Of course, it's also an issue of cost optimization, etc., so the lessons we've learned from the flood is essential. We see that the infrastructure today is better and different than it used to be, but it is still not sufficient in order to protect ourselves from future flooding. Some infrastructures worked well, for example, Racibórz, but the infrastructure in the Kłodzko region was inefficient, so we need infrastructural improvements. On the example of the Austrians or the Czechs, they've built phenomenal anti-flood infrastructure compared to Germans who didn't. In Poland, we feel we have a role to play here. There will be government programs. Of course, infrastructure will be based by the government. That's obvious.
So, as a result, our risk exposure level, it can be adjusted. But in general, we have to realize that infrastructure will not be able to protect us 100%. We will be working on many levels, for example, with local governments looking at their level of infrastructure insurance. And thirdly, all the discussions about anti-catastrophe insurance. This is something we don't have yet. We are active on the first, second level, but not on the third level yet. So, we cannot assume that nothing will change in the next year. I'm sure there will be changes, development. But if next year a similar flooding should happen with no other factors changed, we will be prepared. Of course, unless the scale is really catastrophic. But with the adjustments we have made, we've increased our level of security above these PLN 270 million to billions.
Two more questions. I would like to go back to the non-motor and also motor mass insurance segments. So, are we waiting for these unprofitable portfolios sold in the past to disappear, to end? And is the profitability satisfactory in these segments or far from it?
We are lucky because the motor insurance sector in Poland keeps growing. And we don't have any long-term unprofitable contracts. Of course, the effects of the changes introduced will be seen in some time. But that's one thing. The second thing is the optimizations in claim handling and all related expenses. The time of claim handling also. And I'm not going to go into detail, but we believe that an improvement in claim handling expenses will be visible very soon because we can take steps quite easily and fast with this regard. Of course, we are not waiting until some current contracts.
No, now, I mean, of course, the claims we handle now are based on contracts we sold in the past. The only thing we can do there is optimization of our efficiency. But the second thing, we've seen it in the case of flood. The faster we pay out, the less we have to pay. So, being very efficient and reaching the client fast helps us because we don't have to, if we pay out fast, we don't have to make sure that they receive a replacement vehicle, for example, before. So, I'm sure that you will see positive effects of improved efficiency and optimizations very soon. You also have to remember that motor insurance must be viewed not only from the perspective of core business, but also cash flow effects. It has always been like that.
So, if you have high ratios, insurance companies sometimes are more aggressive in their pricing policies in order to somehow compensate for higher core business costs and investment. I come from the old tradition which said that you have to reserve motor insurance at twice the level of the premiums, x2 . But sometimes the margins have changed. Sometimes it's 5x as high or even more because all people are looking at is the right cash flow and the possibility to invest. But the market will probably learn to do better because it has suffered due to such decisions. But right now, nobody plans to be above 100% of the core in long term because the market has changed. Indeed, it's not what it used to be 30 years ago.
But when you look at the possibility to raise prices, looking at our competitors who don't report according to IFRS, but these old Polish regulations, they see it in total, so they don't look at the core of motor insurance, but also investment results and the reserves that are available in motor insurance, and they view it as a total, so the reduction of rates will also affect their decisions. They will have to rationalize their pricing policies, so the core will improve. I think, I mean, improvements in the claims handling process will positively affect the core. The time of high interest rates is over, and I'm sure the market realizes it, and I think improving efficiency will be a universal practice. It will be followed by some price adjustments, I believe, and we've seen this improvement in speed of reaching the customer in order to handle claims.
And then the customers might be prepared to pay more because until this day, the prices for motor insurance remain among the lowest in Europe, despite the fact that we drive the same cars as the rest of Europe, etc. But the market is very competitive as it is. So, in order, we have to show the customers added value we can offer because we can reach them faster than others and other efficiencies. And I'm sure we will be able to monetize it.
So, another question. So, it's part strategy, but also part maybe in a general sense. Maybe I misunderstood, but the way I understood your words is that there were some signals that the current group structure is inefficient.
No, no, no. That's not what I'm trying to say. We are trying to close a bracket in the sense that we have started. We wanted to carry out some audits. I mentioned this opening audits, some information in the media. In this way, we are closing the bracket, and that's one thing, and the other thing I was trying to say were some challenges we've seen the last six months, and we are closing them now, so some challenges were connected to the change of the management, so in this way, it is now closed, so we are closing it.
In the meantime, so the operating model, our group structure, and what we did in the last two quarters were mostly two things, so we've already introduced several business units and tribes, and this process will be completed in the next few weeks, and we've provided a strategy, and it's very clear about the structure of our group, including banks, their position, and our assets, so that's what I was trying to say.
Thank you. I understand. That was my point.
The other thing you mentioned was not subject to an audit. Thank you. Are there any other questions in the room?
We've received some questions online, and two are about the flood. So, can the flood still affect performance in Q4?
No, I don't think so. Well, in terms of net values, no. Of course, we will be paying out compensation, but it's a quick process. I think we can say we've changed the paradigm a little bit from this normal standard traditional model to an emergency or extraordinary model. And it has supported very good results because customer satisfaction has improved, which is not obvious for such large catastrophic events where things happen all at the same time.
Another question from Autonomous. You've addressed this question again.
From whom?
Autonomous. The changes about the reinsurance program you've discussed already, but it's an additional question. When will these changes come into force?
The reinsurance program changed mid-year. So, it's already in place. If the flood had been greater or more intense, we would have benefited from the changes already. Somewhere in the mid-year, we've increased our level of security in the first layer. So, luckily, we did not have to use it because the flood turned out not to be as dramatic as it might have been. Of course, it was very tragic and severe in consequences, and many people were affected. But in terms of our result, it cost us more or less as much as agricultural insurance. And in agriculture, we haven't seen a catastrophe. There were just some weather events. But in terms of the impact on our result, it was comparable. It was 230, I think, for agricultural in Q2, and the flood 275 in Q3.
There are several questions about motor, so can you perhaps share with us your outlook on pricing in 2025 for TPL, and will it offset the inflation in claims values?
Well, this time, we are not assuming that changes in prices will resemble those we saw in the previous cycle. Let me just remind you that after significant losses in 2016 and 2015, reaching almost PLN 1 billion every year, then the market recovered with pricing growth dynamics at the level of 30%-40% in two consecutive years. We are not assuming that this time the situation will be as dynamic. We assume that the market will adjust prices, and next year, we will achieve a positive result. However, it will not be characterized by huge leaps in margins i n contrast to what we saw in the previous cycle.
And there is one more difference between what we observed in the past and what we're seeing today. I'm aware that many onlookers thought that our response was not as quick as they would like it to be. Still, I can tell you that the banking sector and the insurance sector responded very quickly, and we did not have one billion losses on one product, for instance. So, we have changed the prices in our MOD and TPL. This was a part of our response. And if we take a look at the results, both quarterly and year-to-date, then we'll see that quarterly, the entire market of TPL insurance was at -2.6%. So, this is nothing dramatic. They can be adjusted with taking measures that Mr. Olech was talking about, for instance, responsible price increases and lowering expenses.
So, lowering the cost of the procedure and the related costs that allow us to close the profitability gap. I am positive that the prices will reflect the market circumstances and that the market will continue to behave rationally. And as a result, the final customer will receive tangible added value in the loss adjustment and claims handling process. And of course, I cannot share right now any specific numbers or percentages with you. What is certain is that we need to build profitability with dropping interest rates and, well, yes, the market will need to adjust.
Yes. When the market rates go down, any changes on the market might be?
I mean, when the going down of interest rates is going to be postponed, then the market's response is going to be postponed as well. Because basically, we do respond to the market situation, and we do have a classic business model that is present.
So, in the mass segment, the core products went up to 95% this year. Was this in any way affected by the weather? It went from 95% in third quarter 2023 to 118% in 2024. And when do you expect an improvement given the price increases you're implementing? The question is specifically about TPL.
So, the weather conditions do not affect TPL. Of course, we might argue that in difficult weather, drivers have to be more concentrated and that weather might affect the accident ratio. And should be taken into account when analyzing the level of premiums in TPL. Because there is a correlation between short-term weather variants. Yes, there is a correlation between this and the accident ratio. All other issues related to flooding.
Flood does not affect TPL. It affects MOD. The aftereffects of the flood are already reflected in our results. Therefore, I consider, in terms of affecting results, this case to be closed, and it will have no influence on our results in Q4 and in 2025. We did notice some fluctuations among customers who are price-sensitive. These are customers that are in our portfolio and the Link4, our competitor portfolio. Mr. Olech already alluded to this situation. We are taking steps to optimize our operations, but we will talk about it more during the unveiling of our strategy on the 2nd of December.
How did the annuity provisions affect TPL in the third quarter, and was it a one-off effect?
This was a one-off effect that increased by 3 percentage points in the core mass segment, PLN 308 million in third quarter.
Now, a question from HSBC. PZU has been growing faster than the competition in the non-motor line. Is this sustainable? That's the first part of the question. The second part of the question is, is there a risk that the competition can get aggressive in non-motor insurance segment too?
We expect that we'll be managed to keep our competitive advantage in sales. It's easier for us to reach out to certain segments or certain groups of clients. We also have quite a unique distribution model that makes us stand out against the competition. We are the only one who have TUW. This allows us to reach individual clients and generate high income. It's a mutual insurance fund, TUW. So, this gives us a competitive advantage over the rest of the market.
Regarding the macro factors, such as the EU funds or large investments that are supposed to take place in Poland, well, we believe that these factors will translate into an increased demand for insurance services. In particular, in the corporate segment, which is going to be a beneficiary of infrastructure projects connected with, for instance, energy transition. We want to participate in those projects as an insurer, as an investor. Because we do have a number of assets, and our balance also has its capacity.
The question about dividends. Is your dividend policy under review currently? Is it going to be a part of the strategic plan?
Yes. Yes. We will talk about our plans concerning dividends in our presentation in December. You may have noticed that the level of reinsurance secures us not only against the flood, but also, yet reinsurance allows us a certain cash flow to be able to regularly pay dividends. We met with many of you and with numerous shareholders when we were preparing our strategy. We are well aware of the importance of the dividend. It concerns not only PZU, but also other companies that are listed on European markets. I believe that the strategy that we are about to present will show how we intend to keep a satisfactory dividend policy.
The final question from PKO BP Securities: what was the scale of the mismatch for swap points and appraisal report in the third quarter 2024?
Honestly, I don't remember this well. The mismatch year- on- year as far as swap points go. It was several dozen millions, for sure less than PLN 50 million.
And when it comes to valuation, third quarter, as you know, was not exposed to any changes in valuations. Valuations are actually reviewed in every second and fourth quarter. We use appraisal reports to do so. And then, if there are any changes, then they are reflected in our books. So, we only checked those indicators that we can compare to the previous year.
There are no further questions. So, thank you. And we invite you back on the 2nd of December.