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Azamat Yerdessov: the most effective methods of increasing the level of financial literacy and public confidence in the life insurance products

Our portal is launching a series of publications by life insurance experts in Kazakhstan, including leaders of domestic LICs, on current topics in the development of this sector. In the framework of our project, we are giving the first word to Azamat YERDESSOV, the Chairman of the Board of JSC LIC Freedom Finance Life. He expresses his view on the reasons for the low popularity of life insurance among Kazakhstani people and offers effective methods of increasing the level of financial literacy and public confidence in the LIC products.
Azamat Yerdessov: the most effective methods of increasing the level of financial literacy and public confidence in the life insurance products

Life insurance is not a new financial instrument, it is well known by Kazakhstani people. For example, back in the Soviet Union besides the developed social insurance there were affordable life insurance programs. Unfortunately, after the Soviet Union collapse and over the following years of independence of Kazakhstan, insurance ceased to be very popular. The reason is the lack of money from the population, a poor financial culture and distrust of financial institutions in general.

In recent years, the situation is changing: the number of customers is growing, and so is the amount of premiums and insurance payments collected. Thus, according to the National Bank, in 2017 the volume of life insurance premiums increased by 20%, the volume of payments - by 8%, and the number of contracts - by 5%. The positive trend is expected to remain in 2018.

Despite that, the level of the life insurance market development in Kazakhstan is insufficient. The market still has a long way to go and, most importantly, raise the level of financial literacy of the population. This is the cornerstone of market development. As long as the population does not understand how financial instruments work, the market will not develop.

According to Standard & Poors, the financial literacy rate in Kazakhstan in 2014 was only 40%. Whereas, in most developed countries, this index exceeds 50-55%. It means we have a lot of work to do.

In my opinion, the most effective methods of improving the level of financial literacy and public confidence in the life insurance products are:

Transparency and exposure of insurance products: it became the custom that people in Kazakhstan seem mistrustful of financial organizations because of privacy, non-transparency and complexity of systems and financial products.

To increase confidence, the insurance process should be as simple, transparent and understandable as possible. Clients, choosing a suitable life insurance program, need to know what insurance terms exist on the market, how the policy cost is formed, and what exactly is included in it.

Therefore, the main task of insurance companies is not just to create simple and understandable insurance products, but also do everything so that their clients understand these products, their purposes, and how they can help.

Information accessibility: the second method is to communicate information about insurance products in the simplest was possible. The problem is that the language spoken by financiers is complex and often incomprehensible to the majority. The concepts “Franchising”, “Insurance Coverage” and “Insurance Premium” understandable to each insurer cause confusion among many Kazakhstanis.

Therefore, our task is to do everything so that complicated financial terms are understandable to everyone. This can be done in several ways: by simplifying the language of communication with customers and explaining the essence of products in the most accessible ways. In my opinion, work with the media is important, and not only specialized but mass ones.

Financial literacy training: in many western countries, financial literacy is taught in schools. And this is as it should be! In my opinion, we need such a discipline in Kazakhstan, and not only in schools and universities, but also as extra classes and even clubs for children. The concept of financial literacy includes not only an understanding of financial terms and how financial mechanisms work, but also the ability to assess and control one’s income and expenses.

It is important that not only the state but also the financial institutions should be included in the process. For that, specialized publications, newsletters, and support services need to be created.

Digitization: this is probably one of the most important trends of recent years. After all, thanks to IT technology, we can simplify and automate many processes as much as possible, including insurance. It is important for the country to introduce an electronic policy on compulsory automobile liability insurance.  Considering that this is a dominant type of insurance in Kazakhstan, its development should give even greater impulse to the insurance market development in general and become a bridge between the population and other types of insurance, including life insurance.

It is important to understand that such methods do not work separately, all this should work in the system, only then there will be a result.


Azamat Yerdessov has been a head of the company since August 1 this year. He is a graduate of the T. Ryskulov Kazakh Economic University with qualification - economist, as well as the International Academy of Business, Almaty, and the Financial Academy under the Government of the Russian Federation, Moscow, with a Master’s degree in finance.

He has experience in asset management, being the head of the trading operations department at JSC BCC Invest, the Management Board Chairman of JSC Griffon Finance, and a member of the Management Board - Managing Director of JSC Kazkommerts Securities.

Today, Freedom Finance Life, the former JSC LIC Asia Life, which has recently changed its shareholders, has 16 branches throughout Kazakhstan. The company has developed 11 life insurance products, the average work experience of the company's specialists is 10 years; the amount of paid charter capital is 1.8 billion tenge (source -

New shareholders of the company are Freedom Finance, an investment company providing brokerage services, trust management of securities and access to the stock markets of Kazakhstan, Russia, the USA and Europe. As reported on its official website, the company is a part of the international group Freedom Holding Corp, operating since 2008. Freedom Finance Corp. led by its general director Timur Turlov manages Freedom Finance.


Photo of Azamat Yerdessov is provided by the press service of Freedom Finance Life Company.

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