The company’s practice of extending liability insurance agreements may be infringing consumer rights. Poland’s Office of Competition and Consumer Protection (UOKiK) has initiated proceedings in the case after receiving information from the Financial Ombudsman.  

Motor vehicle owners are required to have liability insurance. When clients do not terminate their agreements, which are signed for 12-month periods, the insurance company automatically extends them for another year. Before the contract’s expiration date, the insurance company is required to send clients information on insurance for the coming period, including the amount of the next year's premium. To eliminate the occurrence of motor vehicle owners holding double liability insurance, they may terminate an agreement concluded by automatic extension if they hold valid liability insurance from another company.

UOKiK and Poland’s Financial Ombudsman have determined that Link4 Insurance Company may be misinterpreting the law. If clients have paid the premium indicated in the letter they have received from Link4, then find a better deal and conclude a liability insurance contract with another insurer, the company maintains they may not terminate the contract with Link4. The company contends that clients may do that only if they did not respond to the letter and did not pay the premium it specified.

UOKiK and the Financial Ombudsman further interpret the law to mean an agreement for liability insurance is automatically renewed if the consumer does not terminate it, regardless of whether they paid the premium stated in the letter before the insurance expired or not. In both cases, however, the consumer should be able to terminate the agreement with the company, if he or she has taken out liability insurance with a different company.

According to the Act on competition and consumer protection, UOKiK may, following administrative proceedings, issue a decision prohibiting a practice that infringes consumer rights and impose a fine of up to 10 percent of a company’s previous year turnover. It may also specify measures a company must take to remove the lasting effects of an unlawful practice.

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