KAZAKHSTAN: compulsory travel insurance reached record premiums in seven months

5 October 2021 — Marina MAGNAVAL
For the period from January to June 2021, GWP of the compulsory travel insurance, according to the National Bank of Kazakhstan, reached a record volume of KZT 2.2 billion (~EUR 4.36 million*), which is five times more y-o-y and 1.5 times more compared to the same period of 2019, Allinsurance.kz reports.

However, it is noted that the number of Kazakhstani tourists who went abroad in 2021 has not yet reached the level of 2019, although collected GWP under compulsory travel insurance are the highest since this insurance was launched back in 2019 (from January 1, 2019).

GWP for seven months of 2019 amounted to almost KZT 1.5 billion, then in 2020, when the pandemic started and restrictions were introduced, GWP in compulsory travel insurance fell by almost 4 times, to KZT 409 million in seven months. In 2021, several tourist destinations were opened, which led to a GWP increase, said Yerlan BURABAYEV, Managing Director of the Association of Financiers of Kazakhstan (AFK).

As of August 1, 2021, the number of tourists travelling abroad, in the interests of which tour operators concluded insurance contracts, increased by 347.8% y-o-y, but still was less by 13% than in 2019, noted Marina SHIPOVALOVA, insurance consultant, director of Interconsult info. According to her, the cost of compulsory travel insurance in 2021 is more than 70% higher compared to 2019.

In Kazakhstan, the share of travel insurance in the portfolio of compulsory insurance is about 3% of GWP and about 1% in paid claims. The leader in the segment of compulsory travel insurance is NOMAD Insurance, which, according to the National Bank, accounts for almost 93% of GWP and 62% of paid claims in the market. Since the beginning of the year, the company has collected KZT 2 billion of premiums (5 times more than in the same period in 2020, and +61% to the same period of 2019). At the same time, paid claims reached only KZT 204 million.

Independent travelers use voluntary travel insurance covering both accidents and acute illnesses. Since the beginning of the year, GWP in this class has amounted to KZT 1.2 billion (1.5 times more than in the same period in 2020, and half as much as in 2019). Voluntary insurance for those traveling abroad has not yet returned to the pre-pandemic level, since many countries still do not allow foreign tourists, BURABAYEV believes. "Now this type of insurance is mainly purchased by independently traveling tourists and businessmen, the number of which in seven months of 2021 decreased by 6% y-o-y, and by 73% compared to 2019", says Marina SHIPOVALOVA.

Although the GWP collection in the two classes of travel insurance in 2021 increased y-o-y, paid claims decreased. For compulsory travel insurance paid claims amounted to KZT 331 million (-3.6% y-o-y), for voluntary travel insurance - KZT 100 million (-44%). "The decrease is due to a reduction in insurance claims for both compulsory travel insurance (-60.4%) and voluntary (-78.7%). At the same time, the average paid claim amount in compulsory travel insurance increased by 143.6%, to about KZT 170 thousand tenge, in voluntary - by 164%, up to KZT 335 thousand. Against the background of a decrease in the frequency of claims paid, an increase of the average cost of medical services abroad, which are paid by insurers, indicates that tourists abroad are less likely to get sick, but it has become more expensive for insurers to treat them", explained Marina SHIPOVALOVA.

In 2020, compulsory travel insurance saw a significant direct loss ratio - at 84%, but in 2021, the loss ratio returned to a usual range of up to 15%. The loss ratio of voluntary insurance for those traveling abroad in seven months of last year was at the level of 22.3%, and this year it returned to 8.5%. "This suggests that in 2021 tourists have become less likely to seek medical help abroad, as well as that self-traveling tourists and businessmen who travel abroad are much less likely to get sick", says the director of Interconsult info.

* at the following exchange rate:

EUR 1 = KZT 504.91 (as of 01.08.2021)

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