The life insurance industry demonstrated higher growth rates as of late 2020 adding 16%. Out of nine companies, three showed negative dynamics, six - positive.
The top 3 was formed by LICs Nomad Life, Halyk-Life and Eurasia. Due to the market position strengthening of Freedom Finance Life Company (4th place was provided due to high dynamics, 334.9% per year), the decrease in concentration in the industry took place. The top 3 controlled 76.1% in 2019, and 69.7% in 2020.
LIC Nomad Life holds the palm of victory; the company has collected 72.1 billion tenge of premiums in 2020 demonstrating a 17.8% growth. The main contribution to the positive dynamics was provided by voluntary life insurance, which brought 35.1 billion tenge to the company adding 117.6% over the year. The share of this item increased to 48.6%; in 2019 the figure was at the level of 26.3%. There was also a rise in accident insurance (+298.7%). And such types as annuity insurance and compulsory insurance of employees against accidents (CAI) experienced a decrease by 20.6 and 11.8%, respectively.
Nomad Life has been actively developing digital sales channels since the beginning of 2020. For example, the solutions, that allow customers to conclude insurance contracts online, as well as to track the results of their investments in their personal account, have appeared. The company pointed out the factors that helped increase the volume of insurance premiums.
“ARDFM has completed the formation of a regulatory framework for the creation and promotion of endowment insurance programs with clients’ participation in investments by the summer of 2020. This allows Nomad Life to introduce unit-linked technology in Kazakhstan, with the help of which the company's clients get the opportunity to use the benefits of insurance and investing in the stock market and enjoy tax benefits. They are provided with insurance protection and legal privileges,” comments on the situation in 2020 Kairat Chegebayev, the Board Chairman of Nomad Life. In the first three months of 2020, 4.3 billion tenge of insurance premiums were attracted under this program.
LIC Halyk-Life is in the second place of the ranking. The company collected 66.5 billion tenge of insurance premiums, or 13.7% less than in 2019. The negative trend is associated with a decrease in fee collection on annuity insurance (-26.9%), accident insurance (-42.1%) and compulsory employee insurance against accidents (-22.4%). The fees on life insurance, meanwhile, have increased by 2.3%, the share of which in the total volume of premiums is predominant, 55.1% (46.5% in 2019).
The Halyk-Life company, like its competitors, is concentrated on digitalization of business processes. “For this purpose, it updated the client's personal account and was the first among life insurance companies to launch a mobile application on the market, designed so that clients could quickly receive services 24/7from anywhere in the world online,” says the Board Chairman of Halyk-Life Zhanar Zhubaniyazova.
The company also implemented a project for online sales of insurance policies under the Life-COVID-19 program, developed information sites for the most popular insurance products, where any client could learn the insurance conditions, make a preliminary calculation and submit a request for consultation. The product Halyk-Kazyna endowment life insurance program with an interest rate of up to 3.52% in foreign currency launched last year became one of the most popular for the company. The client is offered a return higher than a foreign currency deposit and insurance coverage for the period of savings.
“The 2020 pandemic did not have any significant impact on the insurance of individuals. We note an increase in the number of contracts concluded with individuals for all classes of insurance,” Zhubaniyazova continues. However, the pandemic has moderately affected the compulsory accident insurance of employees. Thus, the number of concluded agreements on this type of insurance remained at the level of 2019, and the average insurance premium increased by only 2%. Restraining factors for this type of insurance were the closure of some SMEs, job cuts during the quarantine period, and a partial reduction in wages.
The third position in the ranking belongs to LIC Eurasia, which collected 20.8 billion tenge of insurance premiums demonstrating a record growth for the industry of 334.9%. The company has significantly increased the premiums in the annuity insurance class (retirement annuity mainly) from 181.9 million tenge to 10.1 billion tenge. The share in total premiums jumped from 3.8% to 48.5% in 2020. The collection rate for life and accident insurance significantly increased in absolute terms by 3.3 billion tenge (+601%) and 1.3 billion tenge (+722.8%) respectively. Accident insurance, which accounted for 81.2% of revenue in 2019, showed an increase of 41%. But against the background of a rapid growth in other classes, its weight in the total volume of premiums decreased to 26.3% (in 2019 - 81.2%).
LIC Freedom Finance Life is another fast-growing company with an increase of 115.6% and insurance premiums of 20.4 billion tenge. “Freedom Finance Life is an advanced company, - they state in the LIC. - During the quarantine and self-isolation period, the company focused on online insurance. We have developed new programs and modernized the existing ones so that it is convenient and beneficial for clients to get insurance online in a few minutes without leaving home,” says Azamat Yerdessov, the Board Chairman of Freedom Finance Life.
For example, the company launched the Corona Protect insurance program against coronavirus in April 2020. More than 5.5 thousand of individuals and legal entities have issued the policies. The insurance covers risks such as hospitalization and death diagnosed with COVID-19. The insurance payment in the first case is from 100 thousand to 500 thousand tenge, the payment in the second case received by the heirs is from 1 million to 5 million tenge.
“When the devaluation took place in March last year, people became more interested in endowment life insurance. The payments for some programs are made with indexation to the dollar exchange rate, which is very beneficial with long-term savings for large purposes, for example, tuition at a prestigious university,” explains Yerdessov.
LICs showed a dynamic development of the industry facilitated by legislative changes, according to which, the endowment insurance programs allowed clients to participate in investments.
Photos are from open sources.