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How will the money of life insurance companies' clients be protected?

The Agency of the Republic of Kazakhstan for regulation and development of the financial market (ARDFM) adopted a resolution to improve the system of insurance benefits. The document provides for the creation of a guarantee system in the life insurance market, the regulator’s press service reports.
How will the money of life insurance companies' clients be protected?

“The law expands the list of guaranteed insurance classes. Now, the guarantee by the Insurance Payments Guarantee Fund (IPGF) covers all mandatory classes of insurance, retirement annuities and life insurance under the State Educational Accumulative System,” the ARDFM release says.

Thus, it is assumed that in case of insurer’s bankruptcy, its obligations to an individual under a life insurance contract will be fulfilled at the expense of the guarantee fund formed from the insurer’s contributions.

Life insurance is a popular product in Kazakhstan. Thus, according to the results of September 2022, the total gross premiums collected by life insurance companies (LICs) were 273.1 billion tenge, and including the accumulative part of the insurance premium on the Unit-linked product - 277.2 billion tenge.

The resolution improves the procedures for implementation of guarantee payments on new guaranteed insurance classes by IPGF, and also determines the procedure for calculating and paying the contribution rates to IPGF by participating insurance organizations.

Besides, the document defines the procedure for investing the IPGF's own assets and reserves, as well as the procedure for charging the commission fee of IPGF from investing the reserve funds and total contributions of insurance organizations participating in the IPGF.

“The adoption of the resolution will improve the mechanisms for guaranteeing insurance payments to ensure reliable protection of the rights of consumers of insurance services,” the agency concluded.

Photos are from open sources.

 

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