Insurers have successfully adapted to the new working conditions. Thus, Nomad Life focused on simplification of insurance conditions and development of universal products understandable and accessible to every potential client. “Our company has revised its approach to the distribution of life insurance programs with more emphasis on promoting direct selling. This has improved the quality of communication with customers and reduced the cost of executing and issuing an insurance contract making insurance programs even more attractive for people from a financial point of view. We also give priority to the issues of automation, business process quality improvement and online solution implementation from the first contact to the insurance agreement signing with a client,” says Kairat Chegebyaev, the Board Chairman of LIC Nomad Life.
They believe in Centras Kommesk Life that the pandemic has made people realize the importance of life insurance. “More people are interested in savings products on a long-term basis. Besides, life insurance products that cover the treatment of Covid 19, including hospitalizations, as well as the actual costs of medical services and medicines in medical institutions within the limits stipulated by the contract have appeared. As for online sales, this channel is still being worked out, as the life insurance product itself implies an individual approach, in which it is difficult to unify numerous complex risks,” emphasizes Gulzhan Dzhaksymbetova, the Chairman of the Management Board of LIC Centras Kommesk Life.
The popularization of endowment life insurance was boosted by the availability of tax benefit. “It works as follows: when getting a salary (or any other income) a client pays 10% of the individual income tax. However, he can save part of IIT and get it with the salary with an endowment agreement. For example, if a client has been paying 933,000 tenge under endowment agreement within a year, then later he may not pay an individual income tax in the amount of 93,000 tenge,” explains Azamat Yerdessov, the Board Chairman of LIC Freedom Finance Life.
If the insured paid more under endowment agreement, the tax deduction will still be calculated, up to 320 MCI from the paid amount. This amount will increase every year, because the MCI is growing. “Besides, there is no individual income tax withholding under endowment insurance agreements when receiving the insurance payment, the premiums for which have been paid by an individual in his own favor and (or) in favor of close relatives, and (or) by the employer in favor of the employee,” clarifies Vitaly Lyubimov, the Managing Director of LIC Halyk Life.
Savings products contain built-in guarantees for clients nowadays, which are backed by fixed income instruments (government securities, corporate bonds). “Against the background of low rates in the banking sector, more and more people are turning to insurance products. Thus, on average in the market, an insurance contract adapting to changes in the exchange rate offers a guaranteed yield from 3.41% to 4% depending on the insurance period. The high return is provided by insurers due to competent investment strategies,” says Gulzhan Dzhaksymbetova.
Insurers are required to disclose detailed information about the products, in particular, indicate the list of assets, the dynamics of value of which determines the amount of income under the policy. “The profitability of the insurance part of investment life insurance ZOLOTO NOMADOV Invest (the client's investments under the program are divided into two parts: insurance and investment) is up to 3.41% in foreign currency depending on the policy terms, - Kairat Chegebayev gives an example. - The profitability of the product’s investment part depends on the investment portfolios chosen by the client. For example, since the launch of our investment portfolio 500 largest US companies on November 1, 2020, the portfolio has grown by 23.94%.”
Endowment insurance programs do not usually undergo significant changes. But unit-linked investment insurance began operating in the country last year. At the moment, LICs are offering clients not only insurance coverage but also the opportunity to invest. “This program may be a good alternative to a bank deposit in the future. Underwriting requirements are also undergoing changes, as the situation has changed both globally and in the Kazakhstan market last year. Our foreign partners have tightened the underwriting requirements for life insurance by adding extra questions when underwriting,” says Vitaly Lyubimov.
Freedom Finance Life focused on the financial attractiveness of its products. Thus, the annual remuneration rate increased to 4% in dollars and 1.5% in euros under the Freedom Capital program. “The rate increase has made accumulative insurance much more beneficial than a bank deposit, which remuneration does not exceed 1%. Unlike banks, insurers do not issue loans, so they have no distressed assets. Let me remind you that most banks in our country have been closed precisely because of a bad loan portfolio. It turns out that we earn much more for our clients, and the risks in our market are several times lower,” concluded Azamat Yerdessov.