⚠ One Bad Catastrophe Year Undoes Years of DisciplineModerate threat

The combined ratio has a tail, and the tail is catastrophe. Poland is exposed to floods, hailstorms, and increasingly volatile weather, and a single severe event can swamp the property book, pushing the combined ratio well above 100 in a year and wiping out several years' worth of patiently earned underwriting profit. The 2024 floods in central Europe were a reminder that these events are neither rare nor shrinking. Climate change is, if anything, fattening the tail.

Reinsurance and scale cushion the blow — that is much of what they are for — but they do not eliminate it, and a bad catastrophe cycle raises the cost of reinsurance for the future too. The deeper risk is chronic rather than acute: if climate-driven losses rise faster than PZU can reprice policies (and regulators and competition constrain how fast it can raise motor and property premiums), the combined ratio drifts structurally higher and the float's profitability erodes. Underwriting discipline is tested hardest exactly when nature, not management, writes the claims — the 234% Solvency II buffer is the reserve for exactly that day¹.