Concentration in the life insurance sector remains high: 72.7% of assets are formed by three large companies: Halyk-Life (+₸37.9 billion in 1Q24), Nomad Life (-₸3.2 billion) and FFLife (+20.6 billion).
In the first quarter, there has been a significant growth of insurance premiums (+61.8% or ₸60.9 billion), mainly due to their increase in such LIC products as retirement annuity insurance (+₸23.2 billion), life insurance (+₸15.6 billion) and compulsory accident insurance (+₸14.9 billion).
The total number of concluded contracts built up by 2 times due to increased demand for accident insurance (2.3 times), life insurance (1.8 times) and travel insurance (2.8 times).
The growth in the volume of payments (+78.2% or ₸10.2 billion) was mainly associated with such LIC products as compulsory accident insurance (2.5 times or ₸5.3 billion) and life insurance (1.9 times or ₸3.4 billion).
“The demand for retirement annuities has been supported by the product digitalization: from January 1, 2024, contracts with insurance companies can be concluded online. Another positive factor could be that the adequacy thresholds for retirement annuities for the current year were not increased, which allowed more Kazakhstanis to take advantage of this product (6.6 thousand versus 3.3 thousand in 1Q23),” the FIAK report says.
Legislative amendments affected compulsory insurance of employees against accidents: the standards were introduced to reimburse employers for preventive and rehabilitation measures within 6% of paid insurance premiums, and the fault of injured employees was excluded when calculating insurance payments.
“However, it should be noted that the potential for further growth in insurance premiums for these products may be limited by the number of remaining Kazakhstanis with the allowable amount of pension savings for concluding a retirement annuity, as well as legislative changes on CAI. The largest payments for compulsory accident insurance have already been observed in the first quarter of 2024,” the analysts note.
With a potential reduction in demand for existing LIC products and an increase in their costs, the profitability of the sector can be supported by the expansion of the list of investment instruments, the development of “built-in” products included in the cost of non-insurance goods and services, as well as the demand for voluntary products by increasing the financial literacy of Kazakhstanis.
Photos are from open sources.
