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Azamat Yerdessov: Innovations and Life Insurance

The www.lifeinsurance.kz portal continues a series of publications by life insurance experts. Azamat Yerdessov, the Board Chairman of JSC LIC Freedom Finance Life, talks about how innovations affect life insurance.
Azamat Yerdessov: Innovations and Life Insurance

Insurance in Kazakhstan has never been perceived as an innovation unlike the banking sector, where new technologies and solutions come in the first place. It may seem that while Kazakhstani banks have been building entire ecosystems and implementing innovative solutions, the insurance market has not been developing. Despite the fact that over the past 10 years there has not been a truly revolutionary change in the insurance market (with the exception of the electronic policy) this does not mean that insurers have not developed.

The truth is that the market needs to be ready for any technological breakthrough, and so do the users. In my opinion, the insurers are just going through this stage right now. In the 90s, when the market was just emerging, the entire document flow was in paper, and the main insurer’s weapon was a directory with a list of companies and a landline telephone. Ten years later, insurance companies began to invest heavily in infrastructure and service development. Other ten years later, all insurance companies have their own websites, insurance calculators, CRM and digital strategy. Excel has long given way to analyzing big data, and underwriting increasingly relies on scoring systems.

In my opinion, the insurance market is ready for innovation. In this sense, the introduction of online insurance for compulsory types, changes in legislation and related fields are the sign that the time to change has come. It is a long process and online insurance is unlikely to immediately show significant results, but the development vector is strong.

As for life insurance companies, I am confident that there will be a lot of changes in their work in the next 10 years. It is difficult to say now which technologies are to develop in Kazakhstan, and which are not, but, I believe, there are several areas in which technology will be developed.

Online insurance: the introduction of an electronic policy on compulsory types is only the first step. I think we need to implement online insurance for LICs, as well as an online settlement in the nearest future. Only then we can say that there are online services on the market.

Big data analysis: insurance companies have large amount of customer data. Therefore, the ability to analyze this data and make decisions based on it is a logical step. I am confident that Kazakhstani LICs will be able to analyze even more customer data in the near future. For example, the health condition of clients, their medical history and even their lifestyle. Having access to such data, the companies will be able to improve the quality of underwriting and create truly relevant and in-demand products.

Machine learning: given that insurance companies work with risks and should be able to anticipate them, machine learning has great potential. Such systems will allow not only improve the quality of underwriting, but also create dedicated products for each individual client.

Marketplaces: Kazakhstani people are used to sites where they can analyze offers from several insurance companies at once. As a rule, such services are for compulsory legal liability auto insurance. I am certain that in the near future with life insurance development such services will help clients in their search for appropriate programs, for example, universal life insurance.

Telemedicine: the popularity of gadgets that track health indicators is growing every year. In the future, such gadgets may become obligatory for a life insurance contract signing. Thus, insurance companies will be able to monitor health condition of the clients and as the case may be contact clients and give them precise recommendations. In theory, this will decrease the number of insurance events and reduce the cost of insurance products. It is hard to say if something similar will appear in Kazakhstan, because even in Western countries this technology has not yet gained traction.

Let me repeat that it is difficult to predict what will catch on in Kazakhstan and what will not, because there are a lot of factors to be taken into account. However, one thing is clear: a lot now depends on the insurers themselves. The fate of the entire market will depend on how actively we begin to build a new infrastructure and introduce new technologies.

Photo is a courtesy of the company’s press service.

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