- Oksana Stanislavovna, as our editor office learned, last year your company, JSC Halyk-Life, participated in negotiations with the National Bank about the possibility of participation of life insurance companies in the SEA system, the State Educational Accumulative System. What can the LICs contribute to the SEAS development? What are their advantages?
- Yes indeed. JSC Halyk-Life, together with JSC Nomad Life, has initiated negotiations with the National Bank on the possible involvement of life insurance companies in the SES system. Today, in accordance with Clause 2, Article 5 of the Republic of Kazakhstan Law "On State educational accumulative system" the participants of the State educational accumulative system (SEAS) are the depositor, participating bank, contributor, operator, educational organization and authorized body in the field of education. For our part, we consider that life insurance companies could well become members of the SEAS for the following reasons.
First, the essence of the current SEAS is to subsidize state educational deposits by 5% -7%. However, the long-term life insurance saving programs, being a classic product of life insurance companies (hereinafter LIC), just provide for the insurance payment for a date specified by the insurance contract timed to socially significant events of the insured or beneficiary: such as full legal age, entering a university, marriage, etc.
Secondly, the insurance contract provides for additional insurance coverage in case of loss of the breadwinner, accident, etc.
These terms increase the efficiency of savings for the child’s education greatly, since they allow the parents to insure the child’s life for the period of accumulation, and also create an additional source of savings. Thus, in case of depositor’s (parent) safe survival until the end of savings period, the child can count, both on the accumulated amount on SEAS and depending on the insurance policy terms on payment under the accumulative life insurance contract. In case of unforeseen events in the depositor’s life (child’s parent), upon the insurance period completion the child will receive the coverage which the parent was insured for, regardless of how many insurance premiums he had made before the insured event. And this is the main value of such a synergistic effect, which can be obtained when LICs are included in the SEA system.
- What, in your opinion, is the potential of LICs in the SEAS development in the country? And what opportunities does Halyk Life see for companies and customers as the largest company in the market?
- As a result of the work to increase the involvement of citizens of Kazakhstan in the SEAS carried out by the state, we see good prospects for the development of this type of endowment, as insurance for a particular event in life. In addition, the market already offers its customers to take advantage of programs with participation in profits, which provide an opportunity to get additional profitability through the participation of such programs in the profits of the insurance company. Thus, involving LICs in the SEAS, the state will stimulate the further development of life insurance in Kazakhstan, expanding the potential market for insurance companies. For the SEAS depositors, the implementation of such a program will allow not only make savings in the bank, but also receive insurance coverage for the term of the savings, thereby consistently guaranteeing the formation of insurance coverage for education, even in case of an unforeseen event associated with harming the child’s life or health.
- At what stage are your negotiations with the National Bank on the SEA system now? Are we to expect changes following these talks this year? What are the changes?
- At this stage, we are planning to initiate before the National Bank, and then before the Government at the legislative level the possibility for LICs of becoming a full member of the SEAS. As the LIC initiatives previous experience shows, it will probably take up to 3 years to realize the participation of LICs in the SEAS.
- In your opinion, besides SEAS, what other areas of life insurance have a future in Kazakhstan in the coming years?
- As a result of legislative changes in the insurance market last year, in 2019 we were planning to have life insurance programs involving the insured in investments (the so-called unit-linked), which would enable customers of life insurance companies to participate through mutual funds in obtaining additional investment income under the insurance contract. We do not expect a sharp increase in demand for these products in the current year for clients, as well as insurance companies, and investment management companies. The product is completely new. You will have to look at it and try out different options. But we link the future of endowment market in Kazakhstan with this particularly insurance product.
Besides, as part of the insurance market digitalization development in the country, an electronic form of entering into insurance contracts will be used more to reduce costs and time for a client to conclude an insurance contract. Considering our industry specifics there is a high probability that special boxed or, more simply, “non-underwriting” products that do not require a special assessment before entering into an insurance contract will appear on the market.
Photo of Oksana Radchenko is provided by the press service of the company
Photo on the main page is from open sources