KAZAKHSTAN: over the past five years, insurance sector's assets have doubled

7 July 2022 — Marina MAGNAVAL
The assets of insurance companies have doubled over the past 5 years to KZT 1.8 trillion and reached 2.3% of GDP, which is associated with an increase in GWP, according to the Concept for the Development of the Financial Sector of Kazakhstan until 2030.

The draft of the Concept was presented on June 30, 2022 by the Chairman of the Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan Madina ABYLKASYMOVA, Allinsurance.kz wrote.

The concept was developed jointly with the National Bank, the Government, the Association of Financiers of Kazakhstan, financial market participants and experts, and reflects both the needs of market participants and the vision of regulators. International organizations were involved in the development of the Concept as well - the European Bank for Reconstruction and Development, the World Bank and Ernst & Young.

In the insurance sector, the main challenges are related to insufficient development of products of voluntary life and health insurance, property insurance of the population and entrepreneurship against various risks. Along with this, there remains a low interest of citizens and entrepreneurs in the use of insurance instruments due to poor awareness of insurance products, previously existing problems with claim settlement, and relatively high insurance rates.

The insurance market has introduced 100% online conclusion of compulsory civil liability insurance contracts for vehicle owners. At the legislative level, incentives have been adopted for development of accumulative life insurance and a deferred pension annuity has been introduced.

Key initiatives of the Concept for the insurance sector include expanding the product range of insurance services, improving the infrastructure of the insurance market, also through digitalization, as well as increasing stability of the insurance sector through introduction of international standards for assessing solvency.

In the non-life segment, the main development directions will be focused on protecting interests of the population and business entities through introduction of imputed insurance. Development of imputed insurance will ensure property protection of the population from professional mistakes, poor-quality services provided by business entities.

To expand investment opportunities for individuals, activation of long-term cumulative unit-linked life insurance investment products will continue.

Development of the Unified Insurance Database for online settlement will be continued too. To improve the quality of services provided, it is planned to introduce the institution of self-regulation of insurance intermediaries (insurance agents).

To expand capabilities of the national insurance market, it is planned to develop and expand joint insurance of one risk by several insurers through creation of insurance pools for imputed types of insurance.

Further development of the system of guaranteeing insurance payments provides for expansion of guaranteed classes of insurance, simplification of the mechanism for making guarantee payments from the Fund for Guaranteeing Insurance Payments and ensuring continuity of payments for annuity types of insurance.

According to AM Best analysts, the insurance market in Kazakhstan has demonstrated a high degree of resilience to the difficult economic conditions caused by the COVID-19 pandemic.

GWP increased by 43.4% to KZT 815 billion (USD 1.9 billion) in 2021 thanks to consumer demand. According to the agency's analysts, development of the regulatory framework has contributed to the development of new products, improved customer service efficiency and had a positive impact on consumer confidence.

Growth of the market was ensured by life insurance, which increased by 66% thanks to the demand for alternative investment and pension solutions. In addition, demand for insurance products, including health, property, and motor insurance, also expanded and supported a 28% increase in non-life insurance to KZT 435 billion (USD 1.0 billion), according to Allinsurance.kz.

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