⚠ Diseconomies and Legacy DragLow threat

Scale cuts both ways, and a very large, very old insurer accumulates its own kind of fat. Legacy IT systems, layers of process, and the inertia of a state-linked institution can leave the incumbent slower and, in places, more expensive than a lean digital challenger built from scratch on modern software. The theoretical low-cost advantage of scale only shows up if management actually holds the expense line; a bloated incumbent can squander it.

The reinsurance edge is real but not unlimited either — global reinsurance pricing hardens for everyone in a bad catastrophe cycle, and PZU's Polish diversification does not protect it from a worldwide spike in the cost of ceding risk. The threat here is not dramatic; it is the ordinary managerial risk that a dominant incumbent lets its cost advantage erode through complacency, and wakes up matched on price by someone half its size and twice as nimble — the standing risk for a firm double its nearest rival¹.