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IPGF discusses expansion of guaranteed classes of insurance

In early 2000s, bank deposits aroused distrust among Kazakhstanis. The reputation of deposits was tainted by the Soviet practice of ruble denomination (when 10 rubles depreciated to one ruble overnight, and deposits were recalculated at this rate and old money was exchanged for new bills), as well as by numerous bank bankruptcies in the 90s years. Deposit guarantee system corrected the situation and made deposits the most popular financial instrument in the country. Kazakhstan Deposit Guarantee Fund has been paying money to depositors of failed banks for many years. A similar system has started working in the life insurance market. Bakyt Kogulov, Chairman of the Board of Insurance Payments Guarantee Fund, told LifeInsurance about how the situation was changing.
IPGF discusses expansion of guaranteed classes of insurance

- What insurance classes in the life insurance industry are included in the fund’s guarantee?

- If a life insurance company loses its license, IPGF guarantees payments for the following classes of insurance:

  • Compulsory insurance and annuity insurance carried out in accordance with the Law of the Republic of Kazakhstan “On compulsory insurance of an employee against accidents during the performance of their labor (official) duties”;
  • Retirement annuity insurance carried out in accordance with the Law of the Republic of Kazakhstan “On pension provision in the Republic of Kazakhstan”;
  • Life insurance carried out in accordance with the Law of the Republic of Kazakhstan “On the State Educational Savings System”.

The consumers of financial services want to be sure that obligations to them are fulfilled, and the task of IPGF is ensuring an adequate level of protection of consumer rights and interests in the event of revocation of an insurer’s license. The guarantee system helps increase citizens' confidence in insurance services, sustainability and reliability of the sector.

- People need money to pay. Do life insurance companies make payments into the fund?

- In accordance with the law of the Republic of Kazakhstan “On the Insurance Payments Guarantee Fund”, participating insurance organizations are required to pay mandatory and emergency contributions.

The fund annually sets the rate of mandatory and emergency contributions in accordance with the LSI of the authorized body and subsequently agrees with the authorized body and brings to the attention of a participating insurance organization the calculation and payment of contributions to the fund.

- Insurers propose to add a fund guarantee to endowment types of insurance. Is the fund ready for that?

- The Fund is planning to expand the list of guaranteed insurance classes in order to increase public confidence in insurance products not only by LIC, but also by general classes of insurance.

According to the Concept for development of the financial sector of the Republic of Kazakhstan by 2030, in order to maintain public confidence in insurance, the status of IPGF and its role in protecting the interests of consumers of insurance services should be raised. A systematic approach to further development of the system for guaranteeing insurance payments will cover the issues of expanding the guaranteed classes of insurance, revising the mechanism for making guarantee payments, ensuring the continuity of payments for annuity types of insurance, and requirements for corporate governance in IPGF.

In this regard, the fund is working on submission of proposals to the authorized body to expand the guaranteed classes of insurance.

Photo courtesy of the IPGF press service

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