On July 12, 2022, the Head of State signed the Law of the Republic of Kazakhstan “On amendments and additions to certain legislative acts of the Republic of Kazakhstan on regulation and development of insurance and securities markets.”
The insurance market has been showing stable growth over the past five years. Last year, two main industry indicators demonstrated significant growth: the volume of insurance premiums increased by 37% compared to the previous year, and solvency margin (the ratio of assets to liabilities of insurance companies) grew by 7% to 567.5 billion tenge.
It is noteworthy that the market growth is due to development of voluntary types of insurance, such as personal and property insurance. The insurance market’s potential is huge, primarily due to new socially-oriented endowment life insurance products, further digitalization of insurance services, as well as ensuring the protection of consumers of these services.
One of the new socially important life insurance products provided for by the Law is an educational funded insurance product within the framework of the State Educational Savings System (SESS). “Unlike a bank deposit, this product provides additional insurance coverage. In the event of parent’s death or loss of their ability to work, the cost of education is paid under the insurance contract, regardless of the amount accumulated,” Mariya Khadzhiyeva noted. Besides, the Insurance Payments Guarantee Fund guarantees the full payment amount, while under a bank deposit the guarantee covers an amount not exceeding 10 million tenge.
As of September 1, 4 banks are participating in the SESS program and 22 thousand deposits for a total amount of about 33.5 billion tenge have been opened. The participation of life insurance companies in the SESS will create an alternative sales channel for this product and increase the popularity of this system among the population.
Another Law innovation is introduction of a joint (marriage) retirement annuity, which will allow combining the pension savings of a married couple or close relatives and assigning life-long payments to each of them according to an individual schedule. Introduction of joint retirement annuities will increase the savings initiatives of citizens and provide them with additional savings by the time they retire.
The law provides for significant changes in the system of guaranteeing insurance payments. The list of insurance classes guaranteed by the IPGF is expanding. The guarantee system will apply to all compulsory and socially significant classes of insurance, including such new products as joint retirement annuities and life insurance contracts concluded within the framework of SESS.
The period of waiting for consumers to receive insurance payments is significantly reduced. The clients currently have to wait for a court decision to receive payments from the IPGF, which takes a long time. Under the new system, according to the Law, consumers will be able to receive payments immediately after the license of an insurance organization is revoked, without waiting for a court decision on its liquidation.
Photos are from open sources.