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The coronavirus year turned out to be good for life insurance industry

According to the National Bank of Kazakhstan, the total volume of insurance premiums in the whole market for the year increased by 8% and amounted to 452.5 billion tenge. In the sector of voluntary personal insurance, the volume of premiums increased by 9.3% and amounted to 197.4 billion tenge. In particular, the rates on life insurance programs increased by 23.1%. The volume of collected premiums on this type of insurance amounted to 197.4 billion tenge. For obvious reasons, only travel insurance has seriously gone downhill. The leaders of several life insurance companies spoke about the results of 2020 and plans for this year to LIFE INSURANCE.
The coronavirus year turned out to be good for life insurance industry

Despite the lockdown in the HY 2020, the market of life insurance industry with the compulsory accident insurance class has increased by 14% or 22.6 billion tenge for 10 months of 2020. The market growth was due not only to the growth of the life insurance class. Thus, the retirement annuity class increased by 4 billion tenge or 8%, and the accident insurance class - by 3.2 billion tenge or 40%.

“If we analyze financial data, it may be noted that, despite a rather difficult year, almost all financial indices of the life insurance market have raised,” states Nazym Bekbolatova, the Board Chairman of KM Life.

- All companies had to transfer some of their employees to a remote working regime, and also partially revise their plans this year, which had been made up when we did not yet know about the coronavirus. The pandemic naturally pushed the companies to further develop the digital component of their business, stimulated the introduction of new methods of communication and interaction with customers and colleagues, and forced to pay more attention to the enterprise data security.”


As a result of entry of new players in 2019-2020, there are already nine life insurance companies operating on the market, and competition is intensifying. The insurers assess 2020 as follows: “As of December 1, the assets of our company have increased by 59% compared to the same period last year. In October, the rating agency S&P Global Ratings has upgraded the financial strength rating and the issuer's credit rating to BB+ (the outlook on the ratings is Stable). In the same month we were the first to launch a new insurance product for our market, investment life insurance. In a short period of time, we have achieved impressive results.

Since the year beginning, the company has been actively developing digital sales channels, the portfolio has solutions that allow customers to conclude an insurance agreement online, as well as track the results of their investments in their personal account,” says Kairat Chegebayev, the Board Chairman of Nomad Life.

 “Halyk-Life has launched the Life-COVID-19 life insurance program for the case of coronavirus infection already in April, according to which the insurance benefits are made in case of diagnosis of COVID-19 with subsequent hospitalization or death due to this disease. The cost of such a program was from 5 thousand tenge. Secondly, we have expanded the service by launching a new version of Personal Account, which allows our clients to quickly receive a range of services from anywhere in the world around the clock: getting acquainted with information on insurance contracts; paying insurance premiums and tracking payment history; controlling the amount of accrued insurance dividends. Besides, for the first time in the life insurance market, our company has released a mobile application,” says Zhanar Zhubaniyazova, the Board Chairman of Halyk-Life.


“Due to optimization of existing products and launch a number of new ones, we have increased the total amount of insurance premiums by 51.2% compared to 2019. The payments increased by 50.5%. We launched the Corona Protect coronavirus insurance program in April. By the present moment, more than 5 thousand people have bought insurance, which, in our opinion, was a good indicator for a new product. Positive dynamics can be noted in other programs as well, for example, retirement annuity. This year we have increased the collected premiums by 72%. Besides, we are witnessing an increased interest in endowment programs. This is due to the fact that after the spring devaluation, Kazakhstanis became interested in alternative ways of protection against depreciation of the national currency,” commented Azamat Yerdessov, the Board Chairman of Freedom Finance Life.

The reasons of growth

The insurance sector has restructured its work in a matter of days: development concepts and business plans have been revised. Life insurance companies shifted their priorities towards selling voluntary life insurance contracts, which contributed to the growth of this business in 2020. Therefore, the online sales and affordability of certain products have changed consumer attitude towards them. “Large employers more often include some life insurance products in the social package for their employees, which indicates a gradual change in people's attitude towards insurance in general,” said the Nomad Life executive.

There is a flow of clients between LICs in the market mainly due to entry into one or another large industrial financial group, which intensifies competition, so insurers rely on policies that provide high returns to their owners. “Lately, new life insurance products are gaining popularity in the life insurance market, such as life insurance with indexation to currency, as well as life insurance with the participation of the insured in investments, - emphasizes the Board Chairman of Halyk-Life. - Taking into account the modern requirements of customers these insurance products provide policyholders with a higher return on investment.”

New hopes

In 2020, the Agency for Regulation and Supervision of the Financial Market, together with insurers, developed amendments that provided for tax incentives for endowment insurance contracts, as well as changes to offer Kazakhstani people the service of deferred pension annuity. “Due to the fact that all the proposals have been accepted, we expect further growth and expansion of our industry presence of in the economy. We are actively involved in this work and hope that it will bear fruit in the form of further development of the life insurance market,” the KM Life executive believes.

The market and regulator have agreed on a concept for the insurance market development. The draft law is being currently approved, the detailed study of which will continue next year. “The proposed amendments, in particular the participation of life insurance companies in the public educational accumulative system, the introduction of a joint retirement annuity instrument, will allow developing new areas of the life insurance industry,” says Kairat Chegebayev.

Many experts agree today that next year will be marked by the fight against the consequences of the coronavirus crisis. “One of the key challenges for the country will be the growth of poverty because a significant part of the population, especially people employed in the private sector, has suffered serious losses during lockdowns and quarantines. Therefore, we intend to offer the market affordable, comprehensible and inexpensive life insurance programs next year,” says Zhanar Zhubaniyazova. Besides, Halyk-Life will focus on digitalization and endowment life insurance products with an investment component.

Freedom Finance Life is planning to develop new products and improve existing programs. “First of all, endowment life insurance and retirement annuity programs; it will help Kazakhstani people to protect money from depreciation and increase capital and solve social problems,” Azamat Yerdessov noted.


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