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What clients can be credited by insurers?

The Kazakhstani life insurance market is constantly developing. Insurers create new products, negotiate sales with banks, and sell insurance online. All this, however, would be impossible without the legal framework. We will tell about one of the latest initiatives of the Agency of the Republic of Kazakhstan for regulation and development of the financial market (ARDFM) here.
What clients can be credited by insurers?

Kazakhstani life insurance companies sometimes support their clients. “A life insurance company provides loans to its clients at interest rate that does not exceed the following indicators: the official inflation rate for the previous financial year or the investment rate of return guaranteed under the endowment agreement. As a result, the interest rate depends on which of the values ​​is the highest, plus 2%. The interest rate on the loan is indicated in the loan agreement at the time of its signing by both parties and remains unchanged for the entire period of the agreement,” explains Azamat Yerdessov, the Board Chairman of LIC Freedom Life.

The loan is granted for any purpose, including in the form of a deferral of payment of regular insurance premiums under endowment agreement. The loan term depends on the loan amount. “The client has the opportunity to issue a loan secured by the redemption amount under the insurance contract. The insurance rules provide that, if necessary, a year after the conclusion of the insurance contract, the client can apply for a loan from the insurance company in the amount of 85% of the redemption amount specified in the insurance contract for the corresponding year. The loan rate is quite conservative, today it is 11.4% per annum. Thus, the client has the opportunity to use part of his savings, if necessary,” says Vitaly Lyubimov, Managing Director of LIC Halyk-Life.

ARDFM adopted a resolution recently, according to which not all LIC clients can count on loans. Thus, this list excludes products that are subject to the obligations of the Insurance Payments Guarantee Fund (IPGF). “The bill approved by the Senate of the Parliament of the Republic of Kazakhstan in June 2022, will also include a new insurance class as guaranteed types of insurance - “life insurance within the framework of the state education savings system”, and this class of insurance is cumulative and involves partial subsidizing of savings through annual state premiums accrued on paid insurance premiums under an insurance contract. Due to the government participation, this class of insurance was classified as guaranteed by the IPGF and, as a result, it was proposed to include a condition in the decree on the procedure for issuing loans that the issuance of loans would be prohibited in the class “life insurance within the state education savings system,” says Yelena Taytugoleva, managing director of Nomad Life.

The guaranteed types of insurance currently include the following:

  • Compulsory insurance of civil liability of vehicle owners;
  • Compulsory insurance of the carrier's civil liability to passengers;
  • Compulsory travel insurance;
  • Annuity insurance carried out in accordance with the laws of the Republic of Kazakhstan “On compulsory insurance of an employee against accidents in the performance of his labor (service) duties” and “On pension provision in the Republic of Kazakhstan”.

Photos are from open sources. 

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