Murat Kastayev, the General Director of DAMU Capital Management LLP, notes that the life insurance segment in Kazakhstan is growing twice as fast as the insurance market as a whole. Since the year beginning the insurance assets have grown by 8%, and life insurance assets - 17%. As of year beginning, the LIC assets have amounted to 330 billion tenge, 31% of the industry’s assets, but as of September 1, this figure is already 34%, 386 billion tenge. The LIC assets have reached a psychological mark of $1 billion.
The analyst predicts the LIC assets to exceed 400-410 billion tenge, showing an annual increase of 20-25% by the end of the year. “The insurance premiums collected by LICs are growing more rapidly than insurance payments. As a result, ratio of premiums to payments has increased from 8.2 to 8.8. Thus, LICs get more money than they pay, which is reflected in asset and insurance reserve increase that also have grown by 19%, from 265 to 314 billion tenge, as well as in LIC equity increase by 23%, from 50 up to 61 billion tenge,” states Kastayev.
In the next year or two, the analyst is expecting of 2-3 new companies to appear in this sector through the creation of new structures, purchases of existing life insurance companies by large insurance companies that are not present in the sector yet.
“As for the current competition, the struggle for leadership between the two largest companies in the sector, Halyk-life and Nomad Life, is expected to continue. LIC Nomad Life demonstrates more aggressive growth rates and may overtake LIC Halyk-life in the next 2 years. It’s also interesting to observe the development of LIC Freedom Finance Life, taking into account the youth of this company, its ambitions and ability to work with retail clients, which is confirmed by the success of brokerage business; as well as the dynamics of LIC Eurasia, taking into account the scale, resources and market positions of the parent company,” – believes Kastayev.
According to the forecasts, other companies in the sector will grow more slowly and may become the main participants in possible mergers and acquisitions.
Oleg Khanin, the Board Chairman of Kommesk-Omir Insurance Company, also notes that there is a steady, positive development trend in the Kazakhstani life insurance market today.
According to him, an increase in premiums in this segment is expected to be at least 20-25% per year.
The assets are expected to have similar growth. There might be a slight increase in payments,” said Mr. Khanin.
The life insurance market, in his opinion, has good prospects, in particular, due to the active state support.
“Development roadmaps include various areas of LIC’s participation in both government programs and tax incentives. The legislative base of investment insurance products is being formed,” he specified.
The Board Chairman of Freedom Finance Life Azamat Yerdessov notes that one of the main drivers of premium growth in the insurance market is life insurance (46.4 billion tenge and an increase of 48%), annuity insurance (45.3 billion tenge and an increase of 147%) and health insurance (28.2 billion tenge and an increase of 31%). These types of insurance account for 35.3% of the total market premiums.
The payments in the market increased by 72.3% and reached 106.8 billion tenge. The life insurance payments in particular grew by 27.9% and amounted to 1.5 billion tenge, annuity insurance - 16.6% (9.3 billion tenge), health insurance - 50.9% (15 , 9 billion tenge). These types of insurance account for 25.2% of all payments.
“This trend will retain in the next few years. The growth in premiums will be about 20% by the end of 2019. Over the past few years, several new players have appeared on the market, including the companies, part of large financial groups. This means that the market attractiveness is growing both for large players and for LIC clients,” states Yerdessov.
Madi Shalgimbayev, the Deputy Chairman of the Board of LIC Nomad Life, is expecting a volume growth of LIC assets to 23% by the end of 2019. Last year, according to him, the increased was 20%.
According to Shalgimbayev, the payments in this segment will grow by 30.5%, to 20 billion tenge in 2019, the volume of insurance premiums - by 42%, to 180 billion tenge.
However, he notes that the level of penetration of insurance services in Kazakhstan remains low.
“First, we need to achieve the results of the Russian life insurance market. There are all prerequisites for that in Kazakhstan. The universal life insurance and the upcoming UnitLinked product will be the main growth drivers. Besides, the market is waiting for favorable decisions regarding the connection of LICs to the State Educational Accumulative System (GONS),” he said.
As reported, the analysts predict an increase of total assets of insurance (reinsurance) companies in Kazakhstan by 10-14% by the end of 2019.
The insurance sector of Kazakhstan is represented by 27 insurance (reinsurance) organizations, 8 LICs in particular.