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Demand for retirement annuities increased by 45%

In the first half of 2023, key indicators of the life insurance market showed growth against the backdrop of continued interest in LIC products. This is stated in the report of the Analytical Center of the Financial Institutions’ Association of Kazakhstan (FIAK).
Demand for retirement annuities increased by 45%

“In the 1st HY 2023, there was a noticeable increase in both insurance premiums (+70.3% or ₸17.2 billion) and payouts (by 2.8 times or ₸4.5 billion) under the section “Insurance of employees against accidents cases”. In the reporting period, one can note growth in demand for retirement annuity insurance (an increase in premiums by 44.9% or ₸16.6 billion) with a decrease in the volume of payments (-62.5% or ₸2.3 billion) on it,” the FIAK report says.

Taking into account that the annual payroll fund is the basis for calculating the size of insurance premium for insuring workers against accidents, its increase could significantly contribute to the growth in the volume of premiums. According to the NSB ASBR, in January-June 2023, the payroll fund in Kazakhstan increased by 20.4% compared to the same period last year.

“The increase in retirement annuity premiums could be related to last year's legislative changes allowing spouses to combine pension savings to ensure life payments to both of them. Besides, the extension of guarantees by the Insurance Payment Guarantee Fund could support interest in LIC products. The growth of LIC insurance payments was held back by a reduction in annuity insurance payments (-62.5% or ₸2.3 billion) against the background of a high base last year,” the FIAK report says.

The growth in income of LICs in the form of remuneration on securities (+40.9% or ₸12.8 billion) was mainly due to the current level of the base rate (16.75% in the 1st HY 2023 against an average value of 12.7 % a year earlier).

“Further digitalization of the industry is likely to significantly reduce labor costs (-43.0% or ₸6.8 billion). According to S&P, Kazakhstanis’ annual life insurance spending is gradually increasing ($42 in 2022 vs. $29 in 2020) but remains well below comparable insurance markets (about $100 in Colombia and Poland, about $200 in the Czech Republic and Uruguay)“, concluded in FIAK.

Photos are from open sources.  

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