- Erzhan Erkenovich, you recently took up a new post. What mission is assigned for you?
- As a leader of insurance companies Alliance-Life, Astana Finance, Asia Life and others, my main task has always been to build processes and give a powerful impulse to the company so it can successfully develop in the market. The long-term success of each of them, and all of them are still active players in the industry, convinces me that I make the right strategic decisions.
My first goal in Standard Life by the end of this year is to build a system and profitable business; specifically, to increase profitability up to at least 25%. We plan to achieve such growth by improving process efficiency, setting clear tasks and raising the company's human resources potential. We are strengthening regional and sales networks and back-office by attracting new specialists and training old ones.
In the long term, Standard Life should become the insurance market leader.
- What changes in the legislation could contribute to development of life insurance and benefit the economy?
- Life insurance should take precedence over deposits and other cumulative instruments, and the law should create the relevant conditions, stimulating the acquisition of policies. Why? Acquiring a policy, a person takes responsibility for his future, and does not expect benefits and preferential terms in case of an unpleasant coincidence of circumstances from the state. Such consciousness should be encouraged by the state, for example, by reducing taxes for the policy holder. Such a rule has already been introduced for policies over 7 years, and this is right. After all, if a person is ready to take care of himself on pension or in case of illness, why should he overpay to the state treasury?
The development of insurance is beneficial for the country and, in a broader sense, for the development of the economy as a whole. Insurance companies all over the world are the main long-term investors, i.e. construction of enterprises, plants, investments in mortgages and education. Banks cannot remain successful, issuing mortgages for 20 years, with their assets, funding secured by a maximum of five-year deposits. Insurance companies, in contrast, conclude long-term contracts with customers and, can acquire "long" bonds to the mutual benefit of business, the state and policyholders.
- What does the currently discussed topic of primary access of life insurance companies to the pension system and Unit-Linked model promise to the market and customers?
- Unit-Linked model, of course, will be of interest to any financially literate consumer who is interested in his well-being in retirement. In my deep conviction, the country should focus on work of life insurance companies with pension assets. Insurance companies successfully manage the assets of their clients in the framework of accumulative products and can manage their pension money as well. The state and people are interested in it: pension savings are "long" money, and insurance companies have a maximum of experience in working with them and ensuring their profitability.
Let me remind you that earlier the securities market legislation gave such a right to life insurance companies, and there were instruments adjusted for inflation. The norm was removed for unknown reasons and contrary to international experience.
- And what changes in the law and traditions in insurance should be a priority?
- Complex system changes are important. The role of life insurance in economy, the target indicators and audience of various financial instruments should be determined in general. When there is such understanding, all sorts of details as risks in different areas and liquidity requirements, will become obvious, and they will be followed by adequate products on the market.
In terms of regulatory issues we also need to look at neighboring markets. For example, we now have arbitration with Russia in terms of taxation. However, in Russia, a customer making contribution under 120 thousand rubles a year for the life insurance policy has the right to allocate these contributions for deductions, in addition to the absence of taxation on payment. That is, it turns out that it is more profitable to buy policy in Russia than in Kazakhstan.
- What new trends, in your opinion, will we see in Kazakhstani insurance market in the nearest future?
- Now the technological effectiveness of products is stepping forward. In our strategy, we put our stake on IT and mobile services development: ideally the client should be able to issue a policy, top it up and receive payments without leaving home.
Personalization and service will play an important role in competition between companies: customer-oriented, flexible, targeted products. However, in general, the market will grow due to the traditionally popular types of insurance: pension annuity, compulsory employee insurance, life insurance of the borrower and accumulative insurance.
- If we talk about specific products, what should interest the client in saving schemes?
- First of all, freedom. Saving schemes give greater freedom to choose investments, and, hence, control over their financial well-being and future. In addition, the income rates of accumulation policies are comparable with the rates of banking products, but the client also gets to receive insurance coverage.
- What do you think is the most important in the work of the life insurance company?
- We need to remember that we work with people, not with property. We are becoming a part of significant events in the life of a person, and, due to the business specifics, they are often not the most pleasant ones. It is important to keep balance, same as in the work of doctors: it is necessary to remain humane with no cynicism, but, at the same time, be responsible, wise and professional.
- What are your expectations for life insurance market development in Kazakhstan and worldwide this year?
- From the point of view of contribution to the country's GDP, the LIC in Kazakhstan are still poorly developed. There are great prospects and growth potential, and they need to be used, we at least can achieve the level of popularity same as bank deposits.
Global radical changes are not to be expected. The policies will gradually become better: more flexible, mobile and convenient to manage even from home.