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What is the future for the insurance sector in Kazakhstan?
The sector in the next few years will change beyond recognition

At the end of the year before last, the National Bank seriously took up the insurance market: then, for the first time in many years, the regulator applied sanctions in several insurance companies. Why the supervisor has stopped looking through the flaws of insurers, and what this policy can lead to, Kursiv.kz learned.

Last year, the National Bank applied sanctions and “restrictive measures” (these are written instructions and warnings) to insurers 24 times.

In total, within the framework of administrative proceedings, the regulator collected about 2 million tenge.

Kazakhstan insurance sector

The amount is small, considering that in 12 months 3 insurance companies left the market – Salem, Alliance Policy and Standard Insurance. Just recently, the National Bank deprived Kompetenz of licenses; on January 31, an interim administration began to work in the organization. The release of the National Bank dryly reported that the revocation of work permits was carried out “for repeated suspension of the license.” The head of Kompetenz Zhanar Kaliyeva promised to give a detailed interview to Kursiv.kz after the completion of the trials. Market participants are all as one refuse to comment on the departure of one of the players, but agree to talk about the new requirements of the regulator and checks.

“This year, capitalization requirements have increased again. In addition, the mechanism for calculating certain securities in the portfolio of insurance companies is changing. According to our forecasts, 2 more companies will leave in the near future, ”said Oleg Khanin, chairman of the board of Kommesk-Өmir IC, shared his expectations.

“Most likely another 2-3 insurers will leave the market. Almost none of the companies check the National Bank without suspending the license does not end. For this to be, 3 years ago I can’t believe in anybody, now it’s a reality. Each insurer is waiting for the NB RK to be checked as purgatory, which you enter before going to heaven, ”the chairman of the board of Amanat Insurance IC Yergali Begimbetov compared the regulator’s actions.

The main bank of the country organized insurance purgatory for a reason. The fact is that for many years the majority of insurance companies performed the illegal mission of withdrawing funds from their shareholders abroad, through reinsurance of risks in foreign companies. Now, the supervisor requests information on all counterparties from regulators in other countries. “As a result, the transfer of risks to foreign organizations has decreased significantly, many insurance companies have reduced the volume of gross premiums. The National Bank punishes for this up to the suspension of the license, sends the results of its inspections to the Economic Investigation Service, the National Security Committee. In the market, the share of fictitious insurance fell sharply last year, and it will fall, fall and fall. This is very good, because the market is cleared. The National Bank is doing the right thing when it brings order to the insurance market. It is high time! ”- commented the head of Amanat Insurance IC.

If you believe the official data, the volume of insurance premiums transferred for reinsurance, for the year amounted to 90 billion tenge or 23% of the total insurance premiums. For reinsurance, non-residents of the Republic of Kazakhstan received 20% of insurance premiums. At the same time, for 12 months, 385 billion tenge of insurance premiums were collected. This is 4% more than in 2017. But, a number of insurers prefer to count net premiums – these are gross premiums, minus reinsurance, and plus IC commissions. “The past year for the insurance sector has developed: assets grew quite well by 13%, and exceeded 1 trillion tenge; insurance reserves and equity showed a similar trend. Almost all insurance sector companies showed positive profitability. At the same time, the total amount of insurance premiums decreased slightly, by about 3%, ”shared the details in the Association of Financiers of Kazakhstan.

To prevent gray schemes NB is trying to control the work of foreign insurance brokers. Since January 1, new requirements of the regulator for brokerage companies have come into force. Now all ICs can reinsure risks abroad only with the participation of a local broker. In turn, domestic companies are required to increase the share capital. “The National Bank has introduced new requirements in order to increase the level of capitalization of both insurance companies and insurance brokers. After all, a broker is a representative of both policyholders and insurers. This is done to streamline the market, ”said Oleg Khanin, Chairman of the Board.

Moreover, a single brokerage license is now divided into 2 parts. “There is a license to conclude insurance and reinsurance contracts. It is difficult to comment on the correct decision or not, but some brokers voluntarily give up licenses due to the fact that they are unable to fulfill the requirements of the regulator, ”the head of Kommesk-Өmir shared the details.