Unit-linked – the most popular life insurance product in the world
«I would especially like to say about cash-value life insurance, - they said in JSC LIC «Standard Life» - This product has a huge potential. Its attractiveness is due to several factors. First, it is an absolute insurance protection in case of unforeseen circumstances related to the life and health of the client, and secondly, it is an opportunity to accumulate a certain amount of financial assets for a certain event in life. In addition, the insurance company guarantees a certain income for the period of insurance. The value of savings insurance is the protection of the client, his family and loved ones from possible risks for an unforeseen event. Many people compare this product with a bank deposit. However, the question here is not the difference between the profitability of life insurance products and the bank deposit, but the value of protection of the client. The attractiveness of this product will undoubtedly grow, the world experience speaks for it».
It should be noted that for today the National Bank of the Republic of Kazakhstan is considering the possibility of creating such products of cash-value life insurance as unit-linked, under which the insurer would participate in managing the investment strategy of its savings.
«It is expected that this product will be in demand on the market, which has been proved by the experience of some CIS and European countries», - says Aigul Boranbayeva, managing director of JSC LIC «Kazkom Life».
«Such a financial instrument can be logically integrated into the model of the pension reform discussed today that provides an opportunity to accumulate and manage the pension assets of working citizens in order to accumulate funds for the provision of pensions with the provision of socially directed insurance coverage in the event of adverse events», adds «Standard Life».
«Unit-linked investment insurance is the most popular life insurance product in the world (up to 70%), - notes Askar Shakenov, board member and managing director for insurance of JSC LIC «NOMAD LIFE». - Unit-linked products are a symbiosis of life and investment insurance with the possibility of entering international financial markets. Client individuals are granted with an access to the most popular financial instruments. Such as stocks, bonds, ETFs, structural notes, options, futures and others using various investment strategies at the client's choice, oriented to world indices, oil and raw materials sectors, new technologies, gold and precious metals and much more. At the same time, this product is absolutely transparent, with complete provision of information to the client about the fees charged, with the possibility of daily tracking of the change in the value of its investment portfolio (set of financial instruments), which allows making correct, and most important, timely decisions. This product is designed for a financially competent consumer, and as a prize - obtaining a substantial investment income».
Life insurance – a promising market
In the West, this type of insurance is dominant, insurance premiums account for about 50-60% of the total premiums, says Standard Life.
According to Askar Shakenov, consumer demand for life insurance products will grow, the population is disappointed in the overvalued banking sector due to the events over the past few years. He recalls one of the important rules of successful financiers: «Don’t put all your eggs in one basket!».
In addition, he said, in the near future a pension reform is expected, which should allow citizens to participate in making investment decisions on their pension savings. According to the world practice, life insurance companies should play a key role in this process with their products - defined contribution and defined benefit.
«The most dynamic emerging insurance industry is compulsory insurance of workers against accidents in the performance of their work (service) duties, - «State Annuity Company» (SAC) adds. - Considering the fact that no more than 60% of employers provided their employees with insurance coverage, this type of insurance is the most socially significant and important for the state as a whole, and for every employee. The second direction is pension insurance. It has a demand among the population. The only thing is that not everyone can afford it because of the insufficiency of pension savings. To date, in order to redeem a pension annuity for men at the age of 55, it is necessary to have pension savings of just over 9.6 million tenge, and women at the age of 50 years - more than 13.5 million tenge. The high cost is due to the fact, that the company provides a pension for life. We take care of all the risks of securing his life pension - regardless of whether his retirement savings are over or not».
«We do not forecast a high growth of the borrower's insurance market, but nevertheless growth in the range of 7-10% is possible," says Aigul Boranbayeva. - Also within the range of 10-12%, the growth of the market of compulsory insurance of workers against accidents is possible. On pension annuity, we expect even a slight decrease in volumes associated with a decrease in the number of persons who have a sufficient amount of pension savings necessary for the conclusion of such contracts. In addition, since 2018, according to the changes made to the Law on pension provision in the Republic of Kazakhstan, the frequency of payments under annuity pension agreements will be changed, which will undoubtedly reduce the benefits of this insurance product».
Emphasis on online services
In Standard Life, they believe that main trends in the development of consumer demand in the coming years will be associated with the development of online services.
«The main task of the company in the development of remote communication channels is to stay in touch with the client in 24/7 mode throughout the entire insurance cycle: from calculating the insurance premium to receiving the final insurance payment. This is due to the changes in behavioral models of consumers who today want to get services online without spending additional time resources on them. In addition, consumers appreciate the opportunity to receive services throughout the chain, from signing a contract to obtaining insurance payments online».
«On the part of insurance companies, in our opinion, in order to stimulate the market, it is necessary to carry out activities aimed at improving the insurance culture of citizens, creating simple insurance programs and putting sales of insurance policies on-line, - Aigul Boranbayeva said. It is also important for existing customers to improve the client service, namely, it is necessary to work out the possibility of free access to personal information for clients through various mobile applications, personal cabinets, provide more opportunities to pay insurance premiums through payment terminals, electronic wallets and other mobile applications. The most competitive will be those companies that can quickly solve customer issues, eliminating them from long consideration of issues and making decisions on them».
The Kazakhstan insurance market is practically an undeveloped sector of the economy, in our country, not everyone is covered by insurance protection, - they sum up in SAC. «Firstly, this is due to the poor financial awareness of the population, and secondly, market regulation prevents growth, creativity and progressive development of companies, the «State Annuity Company» explains. - Insurance companies in their investment activities are clamped by the rigid requirements of the regulator. However, the issue is not in limitation, but in the absence of tools in the stock market. We need to go through this stage faster and start developing, offering Kazakhstan people the products and services that are in demand. To do this, it is necessary to raise the financial awareness of the population, ensure the growth of their solvency, develop infrastructure, including legislative development and development of the stock market».
Photo from 1prof.by
