KAZAKHSTAN: S&P assesses insurance industry and country risk for the life insurance
According to S&P, the life insurance sector is still evolving, showing three-year average growth of 18% from a very low base, and maintaining robust profitability. Further diversification of products is under way and the industry has lower exposure to interest-rate-sensitive products - like insurance products with guarantees - than European countries.
The life insurance companies' growth prospects remain positive amid moderate economic wealth, as measured in GDP per capita. The agency noted that the Kazakh life insurance sector showed more resilience to macroeconomic challenges in the past 10 years, which is partly due to the immature nature of the market in Kazakhstan.
Insurance penetration is low, which shows potential for growth, especially given the regulatory initiative to boost further development of the life insurance sector and increase awareness of life products. GWP as a proportion of GDP were around 0.2% in 2018 versus 0.2% in Oman, 0.5% in Russia, and 1.5% in Slovenia.
Total number of life insurers in recent years on the market was 7. In 2018, the market shrunk to 6 players due to the merger of the two large life insurance companies - Kazkommertz life and Halyk life. However, in 2019 a new life insurer was established by EURASIA, as well as another new company KM Life created. Also, on September 25, 2019, the Kommesk Board of directors decided to establish a subsidiary life insurer - Sentras Kommesk Life. Thus, total number of life market participants increased to 9.
Moreover, as Allinsurance.kz informed, based on the results for 8 months of 2019, life insurers contributed over half of the market portfolio, which, in fact, reflects the global trend - market growth supported by the growth of personal and life insurance. According to S&P, so far the sector's concentration is high: TOP-3 occupied 86% of the life insurance market in 1H2019 and in 2018, compared with 75% in 2017, which the agency expects to continue. Pension annuities and universal life insurance continue to be the competitive area in terms of classes.