Experts note that despite the fact that no radical changes are expected in the market, there are still challenges that will force players to strengthen their positions and compete for customers.
“In 2020, foreign players with their experience, competencies, products, business processes and IT systems will be able to enter the Kazakhstan insurance market under the WTO. It is difficult to say how interesting our market is to foreign companies right now, but in the near future they will definitely come to Kazakhstan. This will require major changes in the work of Kazakhstani companies. And it’s not only about profitable tariffs and interesting products, but primarily about business approach, quality service and internal business processes. This will require large investments from insurers,” says Daulet Akizhanov, the Executive Director of Freedom Finance Insurance.
The Board Chairman of Freedom Finance Life Azamat Yerdessov agrees with him. According to him, the retail market is unlikely to be interesting to foreign players; they may be interested in the corporate segment. Such prospects, in his opinion, will force local companies to invest in business improvement and customers will ultimately benefit from this.
The increased competition is also proved by the fact that the number of life insurance companies in the market increased in 2019. According to his forecasts, competition for insurance agents will increase and work in the direction of searching and training agents will intensify.
“First of all, we expect that increased competition will occur in the CAI (compulsory accident insurance of employees) and retirement annuity markets. First market has not yet been fully covered, while the second has great prospects due to pension reform,” Azamat Yerdessov shares his opinion. He also expects that next year, endowment life insurance programs will become part of the State Educational Endowment System (GONS), which ultimately will enable life insurance companies to enter a new market. In general, the expert believes, due to the increase in the number of LICs and competition, the coverage of enterprises will increase significantly.
“As for individuals, we expect that endowment plans will become even more popular, - he noted. - This will be facilitated by the development of unit-linked insurance, endowment insurance programs for parents who want to save up for children’s education, and programs with an interest rate higher than USD deposits.”
Online services will grow
Next year, as in the previous ones, the demand for online products will gradually grow partly owning to development of electronic policies on compulsory automobile liability insurance (CALI).
“It is a big challenge for all retail companies, as they will have to restructure not only business processes, but also the business philosophy,” said Daulet Akizhanov. The insurers together with the regulator have been going through the implementation stage, improved processes and planned a lot of work to develop infrastructure, therefore, this market will continue to grow.
What insurance services will be popular?
Market players expect that such traditional products as CALI (compulsory automobile liability insurance, CNC insurance, bank insurance, life insurance and property insurance will remain the main drivers in retail.
As for corporate clients, liability insurance, property insurance and compulsory accident insurance will continue to be in demand among them, according to Freedom Finance Insurance.
The Kommesk-Umir executive also expects the development of imputed legal liability insurance by introducing it into new categories, including owners of public places of residence, lawyers, appraisers, etc. According to him, imputed insurance can become a guarantor for business to fulfill their property obligations to third parties, for insurers - the starting point for growth.
Oleg Khanin notes the good potential of professional liability insurance, which protects against claims from third parties in connection with errors and omissions committed in the performance of official duties. This type is presented in a mandatory and voluntary form.
“Professional liability insurance, in addition to compensating for financial losses, makes it possible for a professional to settle claims against him in a pre-trial manner without harming his reputation as a result of lengthy lawsuits. Besides, professional liability insurance has also a social component that protects people’s interests,” says the Kommesk-Umir executive.
What should clients expect from insurers in 2020?
In general, experts agreed that insurers will focus on development of online insurance, creation of new services to increase customer loyalty and search for innovative insurance products in the coming year.
“The insurance market will continue to change under the influence of digitalization and high technology. Unfortunately, macroeconomic insurance indices do not reach the economy scale yet. As of November 1, 2019, the share of insurance premiums in GDP was 0.67%, and the ratio of insurance premiums per capita was about 22,384 tenge. Thus, the insurance industry has great potential,” concluded Oleg Khanin.
Photos are from open sources.