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INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN Analytical department of Rating agency of RFCA: Anel Utembayeva
Rating agency of the Regional
financial center of Almaty JSC
136, Dostyk avenue,
office 9, floor 9
050051 Almaty, Republic of Kazakhstan
Tel: (727) 224 48 41,
224 48 44
Fax: (727) 330 23 03
[email protected] http://www.rfcaratings.kz
Almaty 2015
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
TABLE OF CONTENTS Resume
Section 1. Review of key macroeconomic indicators of the Republic of Kazakhstan
1.1 Key macroeconomic indicators of the Republic of Kazakhstan for 8M2015
1.2 Dynamics of the economy's sectors
1.3 Key indicators of the insurance sector
Section 2. Structure of the insurance market of the Republic of Kazakhstan
2.1 Institutional structure
Section 3. Assets, equity and insurance reserves
3.1 Equity
3.2 Assets
3.3 Liabilities
3.4 Insurance reserves
Section 4. Concentration of insurance sector of Kazakhstan
4.1 Insurance premiums inflow
4.2 Life insurance sector
4.3 General insurance sector
4.4 Insurance claims
Section 5. Reinsurance
Section 6. Government regulation
Section 7. Forecast
2
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
REVIEW OF THE INSURANCE SECTOR OF KAZAKHSTAN AS OF 01/09/2015
Resume
Evaluating the current situation in the insurance sector of Kazakhstan, as a whole, there are positive results demonstrated by the growth of assets and equity of insurance companies, legal system of compulsory insurance is improved, stress-testing and early warning tests are imposed in order to strengthen the state control.
As of 01/09/2015 Kazakhstan insurance companies collected premiums amount to KZT 200.4 bln., which is 6.6% more than premiums over the same period of 2014. It includes insurance premiums collected on compulsory insurance – KZT 49.8 bln., (7% increase versus 01/09/2014), premiums on voluntary personal insurance – KZT 54.7 bln. (1.9% increase), premiums on voluntary property insurance – KZT 95.7 bln. (9.3% increase). Total insurance premiums, collected in «general insurance» sector, exceeded KZT 150.9 bln., which is 4.8% increase versus the same period of 2014.
In 2015 there is a positive trend in premiums on such insurance types as compulsory insurance of third party liability of motor vehicle owners, premiums of which amount to KZT 26,3 bln., 16.8% increase; insurance premiums in medical insurance amount to KZT 18.1 bln., 7.4% increase; insurance premiums in property insurance amount to KZT 47.3 bln., 15.5% increase; insurance premiums in cargo insurance amount to KZT 4.1 bln., 45.1% increase; insurance premiums in voluntary insurance of third party liability amount to KZT 16.6 bln., 22.6% increase. The premiums in motor vehicle insurance, which amounted to KZT 10.7 bln., decreased by 3.2% in comparison with the previous year.
However, the insurance market is showing a steady growth, and this trend is forecasted for 2015 too. At the same time, we can observe an offset towards the retail business, which creates balance for insurance companies to be more stable in the market. Since the Kazakh market today is characterized by limitation in terms of affiliation and the low development of voluntary insurance, this offset will have a positive impact on market and will increase competition among participants. The adoption of new legislative measures will give a new impetus to a further development of the insurance market.
3
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Section 1. Review of key macroeconomic indicators of the Republic of Kazakhstan
1.1 Key macroeconomic indicators for 8M2015
The financial system of Kazakhstan is the most advanced and legally reformed compared to other CIS countries, and its level of financial sector is leading among post-Soviet states. It is recognized as one of the most progressive, as evidenced by estimates of the leading international experts. Kazakhstan was the first among the CIS countries to create the National fund for ensuring sustainable socio-economic development and reducing dependence on unfavorable external factors. In August 2015, gross international reserves of the National Bank of the Republic of Kazakhstan increased by 0.4% to USD 29.1 bln. Net international reserves of the National Bank increased by 0.3% to USD 28.3 bln. During August 2015, international reserves of Kazakhstan, including foreign currency assets of the National Fund (USD 68.8 bln.), increased by 0.7% to USD 97.9 bln.
Table 1. Key indicators of the financial market of the Republic of Kazakhstan as of 01/09/2015, KZT bln.
Indicator Banking sector Securities
sector*
Insurance
sector
Mortgage
companies
Total assets 19 497.0 92.7** 730.8 263.5
Total liabilities 17 140.0 18.9** 377.9 215.0
Equity 2 356.9 73.7 353.0 51.9
* - as of 01/07/2015.
** - financial indicators, excluding tier-2 banks
Source: National Bank of the Republic of Kazakhstan
4
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Table 2. Мacroeconomic indicators
Мacroeconomic indicators Unit of measure
2011 2012 2013 2014 01/09/2015
Population thous.ppl. 16,673 16,909.8 17,160.8 17,417.7 17,584.0
Gross domestic product KZT bln. 27,571.9 30,346.9 35,275.1 39,040.9 -
Industrial output KZT bln. 15,929.0 16,851.8 17,833.8 18,531.8 10,329.3
Agriculture gross output KZT bln. 2,286.0 1,999.0 2,386.1 2,527.9 1,866.4
Construction output KZT bln. 2,085.1 2,266.8 2,439.4 2,667.2 1,853.9
Communication services KZT bln. 582.7 599.6 647.3 680.8 510.3
Retail trade turnover KZT bln. 3,865.8 4,567.7 5,474.3 6,332.3 4,415.8
Fixed capital investments KZT bln. 5,010.2 5,473.2 6,072.7 6,591.5 4,664.0
Consumer Price Index (CPI) (the end of the period, % to
December of the previous year)
% 107.4 106.0 104.8 107.4 102.9
Producer Price Index (PPI) (the end of the period, % to
December of the previous year)
% 120.3 102.1 99.5 98.4 111.6
Unemployed population (assessment)
thous.ppl. 473.0 474.8 470.7 451.9 444.0
Employed population thous.ppl. 8,301.6 8,507.1 8,570.6 8,510.1 8,575.3*
Unemployment level (assessment)
% 5.4 5.3 5.2 5.0 4.9
Average monthly nominal salary KZT 90,028 101,263 109,141 121,021 121,817
Short-term economic indicator % 107.1 102.1 105.2 102.8 100.8
* 2Q2015
Source: Committee on statistics of the Republic of Kazakhstan 1.2 Dynamics of the economy's sectors The industrial output in January-September 2015 amounted to KZT 10,329.3 bln. in current
prices, which is 1% less than in January-September 2014.
Some industries experienced slowdown, so the production in mining and quarrying decreased
by 1.8%, by 1.7% in electricity, gas, steam and air conditioning, by 9% in water supply,
sewerage system, control over waste collection and distribution.
Since 2010 the construction industry has continued to grow, an increase in January-September
2015 was about 4.5%.
5
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Table 3. Industry Index, %
Industry
99,0
Agriculture 103,1
Construction 104,5
Trade 100,9
Transport 106
Communication 101,7
Since 2012, the agriculture gross (services) output
has continued to grow up and as of January-September
2015 it amounted to KZT 1,866.4 bln., that is 3.1%
more than in the same period last year.
Production in manufacturing increased by 0.7%.
Index of physical volume in transport industry in
January-September of 2015 amounted to 106%, in
communication industry - 101.7%, and in trade industry
- 100.9%.
Source: Committee on statistics of the Republic of Kazakhstan 1.3 Key indicators of the insurance sector
Table 4. Key indicators of the insurance sector
Indicators 01/09/2014 01/01/2015 01/09/2015
Insurance premiums to GDP ratio, % 0.42 1.59 0.49
Equity capital to GDP ratio, % 0.75 0.74 0.85
Assets to GDP ratio, % 1.57 0.69 1.77
Insurance premiums per capita, KZT 9,540 15,297 11,412
Source: National Bank of the Republic of Kazakhstan
According to the National Bank of the Republic of Kazakhstan, annual insurance premiums per capita in Kazakhstan are $40 on average in 3Q2015. This rate is much lower than in developed insurance markets of Switzerland (USD 7,700) and
France (USD 3,736), but it corresponds to the level of emerging markets like Serbia (USD
104), Romania (USD 124) and Peru (USD 110).
Specific weight of insurance premiums in GDP remains low. For comparison, in the developed
countries this rate accounts for 6 to 16% (6.1% in Austria, 6.7% in Germany, 7.2% in Italy,
9.4% in the Netherlands, 11% in France and Switzerland, and 16% in the United Kingdom).
6
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Section 2. Structure of insurance market of the Republic of Kazakhstan 2.1 Institutional structure
As of 01/09/2015, insurance market of the Republic of Kazakhstan is represented by 33
licensed insurance organizations (including 7 life insurance organizations, 26 general insurance
organizations, 15 insurance brokers and 62 actuaries).
Table 5. Institutional structure
The institutional structure of the insurance sector
01/09/2014 01/09/2015
Number of insurance organizations, including 34 33
Life insurance 7 7
Number of insurance brokers 14 15
Number of actuaries 71 62 Source: National Bank of the Republic of Kazakhstan As of 01/09/2015 there are 111 mutual insurance companies. Insurance companies have 360
branches, including 266 general insurance branches and 94 life insurance branches.
On the reporting date, 30 insurance organizations are participants of JSC Fund of insurance
payments guarantee.
In addition, there are 8 offices representing insurance (reinsurance) companies - non-residents
of Kazakhstan. Three of them represent Russian insurance organizations – OJSC Ingosstrakh,
JSC Russian National Insurance Company ROSNO, OJSC The SOGAZ Insurance group.
According to the National Bank of the Republic of Kazakhstan as of 01/09/2015 there are 3
insurance (reinsurance) organizations (JSC Insurance company Altyn Policy, JSC Ecopolis
Insurance company and JSC Premier Insurance) are under liquidation now.
7
7
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Section 3. Assets, equity and insurance reserves
Table 6. Financial indicators of the insurance sector, KZT mln.
Financial indicators 01/09/2014 01/09/2015 Change over 01/09/2014,
%
Total assets
604 719 730 850 21
Liabilities 313 285 377 872 21
including insurance reserves 284 716 337 244 18
other liabilities 28 542 40 628 42
Equity (on the balance sheet) 291 434 352 977 21
Source: National Bank of the Republic of Kazakhstan
Equity. As of 01/09/2015 total equity of insurance companies amounted to KZT 352,977 mln.
The total equity of insurance companies increased almost 2 times from the beginning of 2011.
Figure 1. Change in assets, equity and insurance reserves, KZT bln.
Source: National Bank of the republic of Kazakhstan
8
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Assets. The total assets of insurance organizations as of 01/09/2015 amounted to more than
KZT 730,850 mln., which is 20.9% more than in the same period of 2014.
In 2015 there was a slight increase in the structure of insurance companies' assets in
«Money», «Deposits in banks», «Securities» and «Reinsurance assets» accounts, but the
overall investment policy of insurance companies has not undergone major changes compared
to 2014.
Liabilities. As of 01/09/2015 the total liabilities of insurance (reinsurance) companies amounted to KZT 377,872 mln., which is 20.6% more than over the same period last year.
Insurance reserves for fulfillment of undertaken liabilities under existing insurance/reinsurance contracts amount to KZT 337,244 mln. up by 18.4% compared to 01/09/2014.
Table 7. Key financial indicators of five largest insurance (reinsurance) organizations of the
Republic of Kazakhstan as of 01/09/2015, KZT mln.
№
Insurance
(reinsurance)
organization
Assets Insurance
reserves Equity
Retained
earnings
Insurance
premiums
Insurance
claims
1 JSC Eurasia 147,057.4 69,063.2 75,921.0 17,828.0 28,074.0 10,727.0
2 JSC Victory 70,562.5 6,097.7 64,256.5 12,785.7 3,098.8 182.8
3 JSC Halyk
Kazakhinstrah
(Subsidiary of JSC
Halyk Bank)
56,274.9 22,015.2 24,649.7 1,893.7 24,878.5 5,064.5
4 JSC Kazkommerts –
Polis (Subsidiary of
JSC
Kazkommertsbank)
55,621.5 9,888.0 36,958.9 5,003.1 6,313.9 1,726.8
5 JSC Kaspi Insurance 51,924.2 19,109.4 31,715.5 14,986.3 9,381.7 1,155.9
6 Other insurance
companies 349,409.4 211,070.9 119,475.9 30,948.3 128,682.6 32,995.7
Total 730,849.9 337,244.4
352,977.
5 83,445.1 200,429.5 51,852.7
Source: National Bank of the Republic of Kazakhstan
9
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Section 4. Concentration of insurance sector of Kazakhstan 4.1 Insurance premiums inflow
As of 01/09/2015 the total insurance premiums increased by 6.6% compared to the same
period of the last year. The growth of insurance premiums for compulsory insurance remains
stable, but voluntary personal and property insurance has taken a downward trend since 2014.
Table 8. Insurance premiums inflow, KZT mln.
Insurance
premiums inflow 01/01/2011 01/01/2012 01/01/2013 01/01/2014 01/01/2015 01/09/2015
Total, including: 139,963.9 175,528,7 211,513,1 279,235,0 266,121,0 200,429,5
Voluntary personal insurance
35,144.9 53,521.8 85,155.0 94,692.0 81,304.0 54,779.1
Voluntary property insurance
69,382.0 76,541.6 77,678.5 123,251.0 118,641.0 95,759.8
Compulsory insurance
35,437.0 45,465.3 48,679.6 61,293.0 66,176.0 48,890.5
Source: National Bank of the Republic of Kazakhstan
The largest share of insurance premiums as of 8M2015 belongs to voluntary property insurance
(KZT 95,760 mln. or 48% of total insurance premiums). Voluntary personal insurance is 28% of
the total insurance premiums and compulsory insurance is 24% of the total premiums.
Figure 2. Structure of insurance premiums inflow, %
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
10
50 4437
44 48
2530 40
34 28
25 26 23 22 24
0
20
40
60
80
100
120
2011 2012 2013 2014 01.09.2015
Compulsory insurance
Voluntary personal insurance
Voluntary property insurance
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
4.2 Life insurance sector
As of 01/09/2015 the total insurance premiums of the life insurance sector amounted to KZT
12,657.6 mln. This figure is twice more of last year's. Specific weight of insurance premiums of
the life insurance sector accounted for 11.9% of total premiums as of reporting date versus 7.4%
on 01/10/2009.
Table 9. Structure of insurance premiums in life insurance sector, KZT mln.
Premiums 01/01/2011 01/01/2012 01/01/2013 01/01/2014 01/01/2015 01/09/2015
Life insurance 1,655.3 6,473.3 15,023.3 28,759.5 24,691.8 16,114.7
Annuity insurance 16,990.5 24,005.5 37,417.2 27,819.2 22,295.3 15,996.6
Total life
insurance
sector 18,645 30,478.8 52,440.5 56,578.7 46,987.1 32,111.3
Total premiums 153,496.8 266,120.9 211,513.1 279,235.0 266,121.0 200,429.5
Life insurance premiums to the total premiums
12% 11% 25% 20% 18% 16%
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
The change in annuity insurance premiums inflow demonstrates a slight decrease in 2015
compared to 2014 and a significant decrease in 2013.
Figure 3. Structure of insurance premiums inflow in life insurance sector, %
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
11
9179
71
49 50
921
29
51 50
0
20
40
60
80
100
120
2011 2012 2013 2014 01.09.2015
Life insurance
Annuity insurance
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
As of 8M2015 the total insurance premiums in life insurance amounted to KZT 32,111 mln.,
weight of the life insurance sector to the total insurance premiums accounted for 16%. For
comparison, the insurance premiums at the beginning of 2011 amounted to KZT 18,645 mln.,
and the weight in the portfolio did not exceed 12%. In western countries this type of insurance
is the dominant one and insurance premiums compose about 50-60% of the total premiums.
4.3 General insurance sector According to the National Bank of the Republic of Kazakhstan, as of 8M2015, the insurance
premiums in the general insurance sector amounted to KZT 168.3 bln. It has increased by 5.3%
versus 8M2014. The observed dynamics has an annual reduction of insurance premiums since
2008.
Table 10. Structure of insurance premiums in general insurance sector, KZT mln.
Insurance premiums
inflow 01/01/2011 01/01/2012 01/01/2013 01/01/2014 01/01/2015 01/09/2015
Voluntary personal insurance
Illness insurance 10 546.7 12 402.7 16 550.0 19 140.1 22 186.7 18 134.9
Accident insurance 6 941.5 11 476.6 18 185.2 18 973.0 12 129.9 4 532.9
Voluntary property insurance
Property insurance 41 385.5 46 450.8 46 848.3 45 861.7 51 909.9 47 310.1
Insurance against
other financial losses 6 346.3 10 937.0 14 216.7 31 814.3 16 498.5 9 342.9
Voluntary third party
liability 17 906.0 15 410.0 12 134.5 14 831.1 19 159.0 16 604.9
Motor vehicle
insurance 3 366.6 4 257.2 6 730.7 12 174.3 16 756.3 10 755.7
Compulsory insurance
Third party liability
of motor vehicle
owners
20 953.6 27 514.2 27 924.2 31 040.9 33 640.8 26 337.1
Insurance of
employee against
accidents in the
process of execution
of his official
(occupational) duties
12 624.6 22 600.3 26 065.6 26 452.1 28 549.8 20 827.5
Total insurance
premiums 139 963.9 175 528.7 211 513.1 279 235.0 266 121.0 200 429.5
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
12
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Figure 4. Structure of insurance premiums inflow in general insurance sector, %
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
As of 01/09/2015 the largest amounts of premiums were collected from the property insurance
segment - 24% from the total premiums or 48% from the voluntary property insurance
segment. The premiums of this insurance class have demonstrated steady growth for the past
five years. There was an increase of 13% versus the same period of 2014, but in 2016 we
forecast a possible slowdown in insurance premiums of voluntary property due to transition to
a free-floating FX-rate of KZT and a concomitant decrease in effective demand, in 2015.
In the reporting period, approximately 9% of the total insurance premiums were collected from the illness insurance class. This figure has remained stable over the last five years. As of 01/09/2015 in compulsory insurance sector 13% of insurance premiums were collected on compulsory motor third party liability insurance, about 10% - on compulsory insurance of employee against accidents when he/she performs his/her work (office) duties.
13
2428 30
24 24
11
11 9
11 10
1412 11
13 13
66 11
6 5
8 5
5
7 8
2 3
4
6 5
23 2016 20 24
68 7 5 2
6 7 7 8 9
0
20
40
60
80
100
120
2011 2012 2013 2014 01.09.2015
Illness insurance
Insurance against accidents
Property insurance
Motor car insurance
Voluntary third party insurance
Insurance against other financial
losses
Compulsory motor third party
insurance
Insurance of employee against
accidents when he/she performs
his/her work (office) duties
Other insurance classes
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
In 2011-2013 period, there was observed a significant annual growth of insurance premiums,
but the growth rate began to decline in 2014. However, the analysis of the insurance premium
figures as of 01/09/2015 and 01/090/2014, KZT 200,429.5 mln. and of KZT 187,948.8 mln.
respectively, allow to assert that at the end of 2015 the growth of this indicator can recover.
There are two leaders in the segment of compulsory insurance - compulsory insurance of third
party liability of motor vehicle owners and compulsory insurance of employee against
accidents in the process of execution of his official (occupational) duties, which are 53% and
42%, respectively, of the total insurance premiums in compulsory insurance segment.
Figure 5. Share of insurance premiums as of 01/09/2015 in
«compulsory motor third party liability insurance», %
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
The leaders in compulsory insurance of third party liability of motor vehicle owners are three companies - JSC NOMAD Insurance (KZT 3,8 bln.), JSC Tsesna Garant (Subsidiary of JSC Tsesna Bank) (KZT 3,3 bln.), JSC Oil Insurance company (KZT 2,6 bln.).
14
JSC Nomad Insurance
14%
JSC Tsesna Garant
(Subsidiary of JSC
Tsesna Bank) 13%
JSC Oil insurance
company 10%
JSC Alliance Policy 7%
JSC ASKO 6%
JSC Nurpolis
(Subsidiary of
JSC Nurbank) 6%
JSC Sentras
Insurance 6%JSC Salem 4%
JSC Halyk
Kazakhinstrah
(Subsidiary of
JSC Halyk Bank)
4%
JSC Standard 4%
Other insurance
companies 26%
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Figure 5-1. Share of insurance premiums as of 01/09/2015 in compulsory insurance of employee against accidents when he/she performs his/her work (office) duties, %
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
The leaders of collected premiums in this class are JSC Life Insurance Company Kazkommerts Life and JSC Life Insurance Company Halyk Life (Subsidiary of JSC Halyk Bank), which occupy 15% of the market, third and fourth places are shared by JSC Eurasia and JSC Oil insurance company, occupying 7% of the market. 24 insurance companies as of 01/09/2015 have a license on compulsory insurance of
employee against accidents in the process of execution of his official (occupational) duties.
Among them 18 companies are the companies in general insurance and 6 in life insurance.
15
15
JSC Nomad Life 32%
JSC Kazkommerts-Life
15%
JSC Halyk Life
(Subsidiary of JSC
Halyk Bank) 15%
JSC Eurasia 7%
JSC Oil insurance
company 7%
JSC Grandes 5%
JSC Halyk
Kazakhinstrah
(Subsidiary of JSC
Halyk Bank) 3%
JSC State annuity
company JSC 3%
JSC Asia
Life 3%
JSC Alliance
Policy 2%
Other insurance
companies 6%
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
4.4 Insurance claims
The total insurance claims (less reinsurance claims) as of 8M2015 amounted to KZT 51,852.7
mln. This figure, according to the Committee of financial supervision of National Bank of the
Republic of Kazakhstan, amounted to KZT 20,076 mln. versus the same period in 2014.
Table 11. Insurance claims*, KZT mln.
Insurance claims 01/01/2011 01/01/2012 01/01/2013 01/01/2014 01/01/2015 01/09/2015
Total, including 27,139.6 46,139.2 75,706.3 61,461.1 70,980.3 51,852.7
Voluntary personal insurance
13,554.5 23,570.4 41,138.6 24,285.6 26,680.8 20,035.1
Voluntary property insurance
3,769.8 9,677.2 17,031.1 15,595.4 14,977.5 13,870.2
Compulsory insurance
9,815.3 12,891.6 17,536.6 21,580.1 29,321.9 17,947.4
Source: National Bank of the Republic of Kazakhstan * (excluding reinsurance claims)
Figure 6. Structure of insurance claims, %
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
16
1421 22 25 27
50
51 5440 39
3628 23
35 34
0
20
40
60
80
100
120
2011 2012 2013 2014 01.09.2015
Compulsory insurance
Voluntary personal
insurance
Voluntary property
insurance
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Table 12. Structure of claims in compulsory insurance segment, KZT mln.
Class of insurance 01/01/2011 01/01/2012 01/01/2013 01/01/2014 01/01/2015
Third party liability of motor vehicle owners
9,310.2 11,445.5 9,441.3 14,864.3 11,291.1
Third party liability of tourist operator and tourist agent
19.1 136.5 147.3 261.2 220.4
Insurance in agriculture 942.3 308.6 185.7 1,065.8 120.4
Insurance of employee upon accidents in the process of execution of his official (occupational) duties
7,057.5 9,570.6 8,440.0 13,040.2 6,259.4
Total claims 17,536.6 21,580.1 18,263.9 29,321.9 17,947.4
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
Figure 7. Claims in compulsory insurance segment as of 01/09/2015, %
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
As the figure 6 of the structure of insurance claims for compulsory insurance for the past two
years shows, there was a significant increase in the class of compulsory insurance of third party
liability of tourist operator and tourist agent, that occurred with an abrupt growth in the number of
bankruptcies of major travel firms of Kazakhstan.
In 2015 the reduction in number of insurance companies with the license under compulsory
insurance in agriculture to two: JSC Grain insurance company and JSC Halyk Kazakhinstrakh (JSC
Subsidiary of Halyk Bank) – caused the decrease of the insurance claims on this insurance class.
7
17
Insurance in
agriculture 1%Third party liability of
tourist operator and
tourist agent 1%
Third party liability of
motor vehicle owners
63%
Insurance of employee
against accidents in
the process of
execution of his official
(occupational) duties
35%
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
There is an increasing trend in claims on insurance of employee against accidents in the
process of execution of his official (occupational) duties.
Table 13. Structure of voluntary personal insurance claims, KZT mln.
Class of insurance 01/01/2011 01/01/2012 01/01/2013 01/01/2014 01/01/2015
Life insurance 450.7 546,. 575.8 799.8 582.2
Annuity insurance 28,992.4 8,781.8 5,853.1 8,855.3 6,794.9
Accident insurance 883.9 1,278.8 883.3 1,153.8 1,572.7
Illness insurance 10,811.6 13,678.9 10,056.3 15,871.9 11,085.1
Total claims 41,138.6 24,285.6 17,368.5 26,680.8 20,035.1
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
Figure 8. Shares of voluntary personal insurance claims as of 01/09/2015, %
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
In the structure of voluntary personal insurance claims, illness insurance has demonstrated
growth for the last two years, covering 55% of the total voluntary personal insurance claims.
Annuity insurance claims decreased in nominal terms versus 2013, but they account for 34% of
total claims. The share of voluntary life insurance is still low at only 3% of total claims.
18
18
Annuity insurance
34%
Accident insurance
8%
Illness insurance 55%
Life insurance 3%
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Table 14. Structure of claims in voluntary property insurance segment, KZT mln.
Class of insurance 01/01/2011 01/01/2012 01/01/2013 01/01/2014 01/01/2015
Motor vehicle insurance 1,839.3 2,718.9 2,996.0 4,690.1 3,595.3
Property insurance 12,226.6 9,360.9 3,910.3 6,795.4 6,710.9
The insurance of third party liability 1,867.9 868.6 922.6 1,527.7 449.0
Total claims 17,031.1 15,595.4 8,819.4 14,977.5 13,870.2
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
Figure 9. Shares of claims in voluntary property insurance segment as of 01/09/2015, %
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
The structure of claims in voluntary property insurance segment has recently been marked by the growth in motor vehicle insurance class, which accounts for only 26% of total claims. Property insurance still holds the largest share (48%), however, in nominal terms, there is a tendency of slowing growth rate. Conserning insurance claims on insurance contracts by Kazakhstan regions (according to the National Bank of the Republic of Kazakhstan as of 01/07/2015), most of the claims have been paid in Almaty: on compulsory insurance - 13% (KZT 4,261.1 mln.), voluntary personal insurance - 18% (KZT 5,709.9 mln.) and voluntary property insurance - 7% (KZT 2,115.3 mln.). By economic activity the largest insurance claims were paid to the mining and quarrying industry - 14% (KZT 4,596.7 mln.), on insurance of physical persons - 44% (KZT 14,255.4 mln.), as well as on financial activities - 8% (KZT 2,470.9 mln.).
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Property insurance
26%
Motor vehicle
insurance 26%
Other classes of
insurance 48%
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
The specific weight of top-10 insurance companies accounted for 75.9% of the total assets of
the insurance market, 58.6% of the total insurance premiums and 58.7% of insurance
payments.
Table 15. Share of total indicators of the insurance market, %
Weight from total figures of the insurance market, % 01/09/2014 01/09/2015
Premiums of the top ten insurance companies 53.5 58.6
Claims of the top ten insurance companies 50.9 58.7
Assets of the top ten insurance companies 69.1 75.9
Equity of the top ten insurance companies 72.7 76.6
Source: National Bank of the republic of Kazakhstan
Figure 10. Insurance premiums inflow, by insurance company as of 01/09/2015
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
As of 01/09/2015 the largest share of insurance premiums in the total amount is occupied by JSC Eurasia (14%) and JSC Halyk Kazakhinstrakh (Subsidiary of JSC Halyk Bank) (12%).
JSC Eurasia 14%JSC Halyk
Kazakhinstrah 12%
JSC Kazakhmys 7%
JSC Nomad Life 6%
JSC Halyk Life 6%JSC Nomad
Insurance 5%
JSC European
Insurance company
5%
JSC Kaspi
insurance 5%
JSC Oil insurance
company 4%
JSC Kazkommerts-
Life 3%
Other insurance
companies 32%
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Figure 11. Insurance claims, by insurance company as of 01/09/2015
Source: National Bank of the Republic of Kazakhstan, RA of RFCA
As of 01/09/2015 the largest share of the total claims belongs to JSC Eurasia (21%) and JSC Halyk Kazakhinstrakh (Subsidiary of JSC Halyk Bank) (10%).
Section 5. Reinsurance The insurance premiums passed to reinsurance companies over 8M2015 amounted to KZT 66,815 mln. or 33.3% of the total insurance premiums. At the same time 28.6% of total insurance premiums were passed to non-residents reinsurance companies. The total sum of insurance premiums received by insurance (reinsurance) companies under
reinsurance contracts amounted to KZT 16,630 mln. The insurance premiums taken for
reinsurance from non-residents amounted to KZT 8,370 mln.
Table 16. Structure of insurance premiums passed for reinsurance
Insurance premiums passed for reinsurance
01/09/2014 01/09/2015
KZT, mln. %* KZT, mln. %*
Total passed, including 62 637 33,3 66 815 33,3
non-residents 48 759 25,9 57 368 28,6
residents 13 878 7,4 9 448 4,7
Total received for reinsurance from non-residents 10 420 5,5 8 370 4,2
Source: National Bank of the Republic of Kazakhstan * *in percentage under insurance and reinsurance agreements
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JSC Eurasia 21%JSC Halyk
Kazakhinstrah
10%
JSC Oil insurance
company 7%
JSC Nomad Life 6%
JSC Tsesna
Garant 5%
JSC Nomad
Insurance 5%JSC Interteach 4%
JSC Alliance
Policy 4%
LIC State annuity
company JSC 4%
JSC Halyk Life 4%
Other insurance
companies 30%
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Insurance companies reinsure their risks primarily in the UK, the Czech Republic and Germany.
Most reinsurers have high ratings from international rating agencies.
Figure 12. Structure of insurance premiums passed to reinsurance companies, by country
as of 01/09/2014 and 01/09/2015, %
Source: National Bank of the Republic of Kazakhstan
22
1722
22 14
1214
1210
10
8
7
7
4
5
4
4
13
22
9 11
0
20
40
60
80
100
120
Other countries
China
France
UAE
USA
Switzerland
Russian Federation
Germany
Czech Republic
Kazakhstan
Great Britain
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Section VI. Government regulation
The major event of the year in the insurance activity legislation was the adoption of the
Law of the Republic of Kazakhstan from April 27, 2015 № 311-V “On amendments and
additions to some legislative acts of the Republic of Kazakhstan on insurance and Islamic
financing”.
The main purpose of the changes is to ensure steadiness and financial stability of the
system of guaranteeing insurance payments, to improve the system of compulsory insurance
of employees against accidents.
According to the amendments, there was a partial transfer of liability to the employer
for damage compensation in trivial cases of disability (without assignment of disability).
Employer will pay compensation if the degree of professional disability is determined in the
range from 5 to 29 percent inclusive. This measure is intended to enhance the interest of an
employer in rehabilitation of the injured workers and creation of prerequisites for
improvement of working conditions and safety in enterprises.
In his turn, insurer makes insurance payments in case of the loss of the employee's
earnings between 30 and 100 percent inclusive or death of an employee, i.e. the insurance
company will have to cover significant losses.
In order to optimize insurance payments there was made an amendment to the Law
“On compulsory insurance of employee against accidents in the process of execution of his
official (occupational) duties”, according to which the size of the recoverable average monthly
income will not exceed 10 times minimum wage at the contract date. Insurance payment will
also be net of social payments from the State Social Insurance Fund, which will also increase
an interest in early rehabilitation of workers.
An employee's guilt will be considered in determining the insurance payment amount,
but in condition of gross negligence of the employee contributing to violation of labor
protection rules, safety and security of their health.
The legislative rule will increase the interest of employees to comply with safety
requirements and thus may reduce the number of accidents at work.
Now, the legislation provides for the application of a single tariff for all staff categories
in each class of professional risk. To determine the cost of insurance premium, it is necessary
to multiply the annual payroll and the rate corresponding to the class of professional risk,
depending on the enterprise's activity.
Also, to determine the annual payroll, the insurant should apply monthly income of
each employee, but not more than 10 times minimum wage established by the Law on the
republican budget for the financial year multiplied by 12.
There was introduced a correction factor, which is based on the average number of injured
workers over the past 5 years preceding the date of conclusion of insurance contract and
corresponding to the total number of employees at the contract date. Thus, the calculated
insurance premium should be multiplied by the appropriate correction factor.
The minimum insurance amount is set. If the calculated insurance with the statutory
tariff will be less than 1 Minimum wage, the insurance premium shall be rounded up to 1
Minimum wage.
INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Amendments and additions to the legal and regulatory framework governing the
activities of the insurance sector, were mainly directed to a further development of certain
aspects of the insurance sector regulation.
In particular, over 8M2014 following amendments were introduced to the regulatory
framework of the insurance sector. They presume:
- establishment of the procedures of the correction factor application in calculation of
the insurance premium on the contract of compulsory insurance of employee upon accidents
in the process of execution of his official (occupational) duties;
- approval of the list, forms, reporting deadlines of the mutual insurance societies and
the Rules of their submission;
- approval of the list, forms, reporting deadlines of the insurance (reinsurance)
organizations and insurance brokers and the Rules of their submission;
- establishment of the procedure for remuneration of Islamic insurance (reinsurance)
organization for the Islamic insurance fund management as part of the insurance premium
under the conclusion of an Islamic insurance (reinsurance) contract and (or) the part of the
income derived from the investment of Islamic insurance fund;
- establishment of the regulatory values and methodology for calculation of prudential
standards for Islamic insurance (reinsurance) organization and other mandatory norms and
limits;
- approval of the formation Rules, registration, use and distribution of Islamic insurance
fund;
- approval of the Rules of money transfer from Islamic insurance (reinsurance)
company to Islamic insurance fund.
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INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Section VII. Forecast
According to the report on financial stability published by the National Bank of the Republic of
Kazakhstan on July 29, 2015, the current imbalance in the development of the insurance
sector leads to the increase of negative trends caused by the transfer of risk to the external
reinsurance, investment activity, high commissions to insurance agents.
Considering a slowdown in insurance premiums, expected inflation and national currency
devaluation, a significant increase in the cost of the insurance premium is not expected in the
in the current economic situation.
The profitability of the insurance sector will gradually decline due to the loss growth of the
insurance sector, which can serve as a signal for the insurance companies to monitor the
quality of the taken risks more efficiently.
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INSURANCE SECTOR OF THE REPUBLIC OF KAZAKHSTAN
Published by JSC Rating Agency of the Regional Financial Center of Almaty (Rating Agency of the RFCA)
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Copyright JSC Rating Agency of the RFCA 2016
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