KAZAKHSTAN: the share of insurance in the country's GDP in 2021 was 3%

3 May 2022 —
At the end of 2021, the share of the insurance sector of Kazakhstan in the country's GDP amounted to 3%, and in the next 5 years, insurance can increase its profitability by 2 times, Allinsurance.kz wrote with reference to finreview.info.

In 2020, the share of the insurance sector in Kazakhstan's GDP was 3.4%, and before the coronavirus pandemic, it was less than 2%. According to experts, this suggests that insurance companies practically do not seek to expand the list of services provided.

It is also worth noting that the insurance market in Kazakhstan is closely related to the banking sector. Large insurance companies are owned by banking conglomerates. Therefore, over the past fifteen years, the insurance market (and banking) has seen a trend towards reduction in the number of players. For example, as of March 1, 2007, the insurance sector consisted of 40 companies, and at the beginning of March 2022 their number was 27, while 9 of them are life insurers.

According to experts, reduction in the number of insurance companies helped to strengthen the market. Assets of the industry began to grow continuously, in 2018 for the first-time exceeding KZT 1 trillion, and as of March 1, 2022, their volume has already reached KZT 1.9 trillion (EUR 3.43 billion). Improvement of financial indicators is also manifested in terms of capital increase. Over the past five years, capital has doubled to KZT 759.7 billion.

In the first two months of 2022, insurers concluded 1.5 million contracts, which is 11.3% more than y-o-y. This growth is largely due to the fears of the population for their health and life. The number of contracts for accident insurance increased by 71.2%, and for health insurance - by 2.3 times.

As a result, GWP increased by 1.3% or KZT 1.8 billion to KZT 138.6 billion. Compulsory insurance generated KZT 19.9 billion since the beginning of the year, which is 9.6% more y-o-y. Voluntary personal insurance generated KZT 46.3 billion in two months of 2022, which is KZT 7.9 billion less. The decline was primarily due to a 79% reduction in premiums under pension annuity contracts.

Voluntary property insurance for two months generated KZT 72.3 billion, which is KZT 8 billion more y-o-y. This is due to the growth of property damage insurance by 6.6% and civil liability insurance by 2 times.

Paid claims also increased significantly - their volume for the first two months of 2022 reached KZT 21.5 billion, which is 24.6% more than a year earlier. However, in the insurance sector, liquid assets still exceed liabilities. Highly liquid assets grew over the year by 21.8% to KZT 1.6 trillion. The actual solvency margin increased from KZT 514.4 million to KZT 517.7 million.

Among the obstacles that hinder development of insurance, experts note a "meager" list of insurance products, lack of capitalization of insurance companies so that they can fully assume insurance risks, automate work and develop their products, lack of economic incentives and opportunities for development of accumulative life insurance, lack of a clear strategy for the further development of the insurance market.

*EUR 1 = KZT 553.46 (01.03.2022)