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Kazakhstan opens its insurance market for foreigners

As of this year, foreign insurers will be able to open branches in Kazakhstan under the simplified procedure. Maria Khadzhiyeva, the Deputy Chairman of the Agency for Regulation and Development of the Financial Market (ARDFM), shares how foreign companies will be working.
Kazakhstan opens its insurance market for foreigners

To start financial activities on the territory of our country, a foreign financial organization has to obtain permit to open a branch and, after that, a corresponding license from the ARDFM.

“The subsidiaries of foreign insurance organizations must be participants in the mandatory insurance payments guarantee system and have a participation agreement with JSC Insurance Payments Guarantee Fund. The payments under contracts concluded by the branch offices will be guaranteed at the expense of JSC Insurance Payment Guarantee Fund, which in the event of the subsidiary closure will make it possible to carry out uninterrupted payments under insurance contracts within the guaranteed classes of insurance and ensure continuity in fulfilling obligations included in the insurance portfolio", explained the Deputy Chairman of the financial regulator.

To protect the interests of consumers of financial services, a foreign branch is to form assets accepted as a reserve and place them on a current account in a second-tier bank of Kazakhstan with a high level of reliability. The total assets of a non-resident insurance company of the Republic of Kazakhstan must be no less than the amount equivalent to USD 5 billion, and the company’s working experience should be at least 10 years in all industries and classes of insurance.

A branch of a non-resident insurance organization may carry out insurance activities in the general or life insurance, as well as reinsurance activities similar to that for Kazakhstani insurance companies, subject to obtaining the appropriate licenses.

Prudential regulation of branch offices of non-resident insurance organizations provides for the establishment of the Minimum size of the APR instead of the required Minimum size of the charter capital for a newly created insurance organization in the same amount (from 1.5 million MCI to 10.5 million MCI, depending on the insurance industry). The funds are placed into current accounts of second-tier banks of the Republic of Kazakhstan that have a minimum long-term credit rating on an international scale not lower than “BB+” by Standard & Poor's rating agency or a similar level rating by rating agencies Moody's Investors Service and Fitch.

When auditing the activities of a branch of a non-resident insurance organization, the agency has the right to obtain information from a foreign financial supervision body. In case of identifying risks and shortcomings in the activities of the branch of the non-resident insurance organization, the agency may require audit.

 “A non-resident insurance organization can deliberately cease its operations based on the foreign financial supervision authority permission and also forcefully due to decertification by the agency. But as I have already said, in this case, the payments under existing agreements are guaranteed. Violation of the legislation of the Republic of Kazakhstan by the non-resident insurance organization subsidiary, revocation of the license or liquidation of the organization-non-resident can be grounds for ceasing operations”, summarized Maria Khadzhiyeva.

Photos are from open sources.

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