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Life insurance industry leaders sum up the results of the year 2019 and share plans for next year

The network publication LIFE INSURANCE, Information and Analytical Website on Life Insurance, reminded about the main events and trends of 2019. Therefore, the editorial office talked with top managers of the two largest LICs in the country. In addition, we learned about the plans of insurers for 2020.
Life insurance industry leaders sum up the results of the year 2019 and share plans for next year

The life insurance industry demonstrates the highest growth rates in the financial market. For 11 months, life and annuity insurance premiums have amounted to 132 billion tenge, 75.2% more than for the same period in 2018. The growth in life insurance made up to 44% and annuity insurance - 126%.

Life Insurance Company Nomad Life has been a leader in the Kazakhstani LIC market in terms of assets, equity, payments, and insurance reserves since 2012. The Nomad Life executive Kairat Chegebayev answered the questions of LIFE INSURANCE.KZ.

- What are the main events of 2019?

- First of all, a high rating by the leading rating agency S&P should be mentioned. The long-term rating at “BB” (stable outlook) level of and the rating on the national scale at the level of “kzАА-” were assigned to JSC LIC Nomad Life.

In 2019, the life insurance market was on firm ground and kept the previously set pace. As of December 1, 2019, the growth of insurance premiums in the market amounted to more than 58% compared to the same period last year, fees - 174.6 billion tenge. We expect the life sector will close the year 2019 with an amount of 195 billion tenge.

The year was good for JSC LIC Nomad Life; we achieved impressive growth results in all sectors. The company showed the highest asset growth rate on the market, 40 billion tenge or more than 36% (as of 01.12.2019).

We are planning that as of 01.01.2020, the insurance premiums will exceed 61 billion tenge.

An important task implemented by our company in 2019 was the receipt of a license to manage an investment portfolio.

Nomad Life took serious steps on development of online system that has no analogues among LICs. The online system will be used when concluding voluntary life insurance contracts for borrowers of the banks-partners of the Company.

During 2019, we have registered the trademark “Nomad Life”. The registration of the Zoloto Nomadov trademark, the most successful accumulative insurance company product, is being carried out now.

- What should the market expect in 2020?

- In spring of 2020, we are expecting amendments to the Tax Code of the Republic of Kazakhstan, providing additional incentives for users of endowment life insurance products.

The key tasks of the market as a whole and Nomad Life in particular, in the coming year will be the creation and implementation of an insurance product with participation in Unit Linked investments, pension programs, as well as participation in the State Educational Accumulative System (GONS) program which the market has been preparing last few years for. We consider the prospects for expanding the life insurance market by implementing these projects as very substantial.

The introduction of these areas will bring the LIC industry to a completely different level. If we launch them, there will be the most ambitious changes on the financial “field” in the last 10 years, which will lead to a significant improvement in the stock market’s work.

Life insurance Company Halyk-Life, a subsidiary of Halyk Bank of Kazakhstan, was founded in November 2005. According to the official data, as of July 1, the structure’s assets were 153.9 billion tenge, which ensured the first place among the life insurance companies of the Republic of Kazakhstan. Oksana Radchenko, the Board Chairman of Halyk-Life, answered the questions of LIFE INSURANCE.KZ.

- What are the main events of 2019?

- Firstly, the implementation of insurance digitalization. The company began to work on improvement of digital services of company’s customers and distributors, as well as development of digital channels of life insurance contract sale to individuals. The insurance premium payment methods have been expanded as well: by means of company's website, sale network of JSC Halyk Savings Bank of Kazakhstan, Homebank financial portal, or points of sale of JSC Kazpost.

Secondly, the inclusion in the company’s endowment product line of a product that provides for the indexation of contract currency to the current USD rate. Work on creation of a new insurance product with an investment component has begun.

Positive business growth rates in all key areas: by results of 11 months of 2019, the growth of the company's insurance premiums was 30%. The company takes a leading position in the life insurance market. As of December 1, 2019, the Company’s assets increased by 23% compared to the same period last year, the size of insurance reserves increased by 17%.

Affirmation statement of financial sustainability rating: in March 2019, AM Best confirmed the Company’s financial stability rating of B+ (Good) and long-term issuer credit rating of “bbb-”. The outlook on these credit ratings is stable.

The main events influencing the life insurance market in 2019 included the entry into force of certain legislative terms that allowed clients to conclude addendums to existing retirement annuity agreements in order to increase the amount of annuity payments. It is possible to use compulsory professional pension contributions for retirement annuity agreement conclusion now, which contributes to the retirement annuity market growth in the first 11 months of 2019 by 139% or 33.7 billion tenge.

Besides, during the year, the LICs have been actively cooperating with government agencies on amendments to the legislation on pension provision, products with an investment component, as well as initiating proposals for the life insurance market development, for example, the possibility of LICs’ participation in the state educational accumulation system, introduction of the institution of joint (matrimonial) annuity, etc. 

- What should the market expect in 2020?

In 2020, we expect further insurance digitalization. The company initiated a number of issues related to the digitalization of voluntary types of insurance in 2019. This year, we expect that insurance solutions will appear in the Company's portfolio of insurance products being available to customers online, i.e. it will be possible to conclude insurance contracts without visiting the insurance company's office or insurance agent. This approach of insurance service promotion is more beneficial for customers as it saves time and money spent on insurance contracts. On the other hand, this is beneficial for the insurance company itself, since online sales reduce the Company's expenses associated with paying commissions to intermediaries, and decrease time and cost of insurance contract maintenance. Besides, JSC Halyk-Life is actively working to improve digital services for distributors of insurance products that will help such intermediaries quickly receive and transmit information necessary for concluding an insurance contract, control the individual compensation payment, etc. The company also participates in sale of insurance services on the marketplace. The transition of insurance to the digital sphere will stimulate insurance companies to quickly adapt their business processes, IT systems and technologies to market requirements. We see the next step of technological solution development in creation of a financial ecosystem.

The trends of the last two years in the life insurance industry will support competition, which will become an incentive for a qualitative transformation in all areas of the insurance business development. We expect that increased competition will entail the development of customer personalization in the insurance market, give rise to new insurance solutions and discover more cost-effective and efficient ways of distributing insurance services, including through digital technologies. This period may become a new starting point for insurance companies, as there will be customer redistribution, insurance agents and sales channels, in general. This is the period when the companies that are ready for qualitative changes and able to offer the customer the best insurance solutions: flexible individual terms, convenient way to conclude an insurance contract, reduction of time for its execution and maintenance, additional related services, etc., will lead. Moreover, the emergence of new players will positively affect the life insurance market development, as this will allow increasing the country’s population coverage with voluntary types of insurance and compulsory insurance of legal entities.

Development of endowment insurance products with foreign currency component, as well as products with investment component, the so-called Unit-Linked products: there are insurance products on the market that provide for indexation of contract currency to the current foreign exchange rate. These insurance products are more attractive to customers than investing in other financial instruments, because along with a high rate of return of up to 3.41% in currency, depending on the insurance period, the insurance product provides a client with insurance coverage for the entire insurance period. We believe that these products will be popular among insurance companies' clients for their versatility: insurance coverage, accumulation and investment. A few life insurance companies are currently working on next generation of insurance products that include investment component. Current legislation requirements do not allow launching the products now, as in the practical implementation it has turned out that some conditions for the product are not quite clearly regulated by legislative acts. Therefore, insurers are actively working to harmonize the relevant legislation. After making the necessary amendments, we are confident that the market will be replenished with new very interesting and most importantly useful in terms of investment insurance solutions.

In 2020, we believe that the pension annuity market development can be facilitated by the initiative of insurers to amend the legislation on pension support specifying civil rights to conclude a pension annuity agreement before they reach the age of 50/55, but provided that pension savings to be sufficient. The pension system comprehensive reform also includes the issue of introducing a deferred pension annuity instrument, which will allow attracting working people with sufficient savings to participate in providing their decent retirement benefits in advance and reducing the social obligations of the state. This issue will further be discussed with the financial market regulator this year.

Due to creation of the Financial Supervision Agency, a new structure in the financial market, we believe that a closer interaction between the insurance market and new structure will arise, including the legislative activity. It will have a positive impact on the life insurance industry, since now we are on the verge of creating new insurance solutions that need legislative support. 

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