KAZAKHSTAN: insurers offset cost increase for some products against weak premium performance

Premiums in the first half year saw weak performance of 3.7%, while the total number of agreements increased only by 2.6%. At that the leading segment in terms of growth rate was compulsory insurance (+19.4% vs 6.2% a year before), wrote allinsurance.kz.

Last year based on the same period's result the market growth amounted to 3.3%, although a year before that in 2016 the growth rate for the first six months was really significant (33.4%), which means absence of any good drivers and possibilities for rapid growth during the last 2 years.

In 2018 compulsory insurance in terms of growth rate got a long start over the voluntary personal insurance, growth rate of which dropped from 24% to 14%, however, volume of premiums in the voluntary personal insurance class is much higher. The main market driver is voluntary property insurance, but its growth rate has been decreasing 2nd year in a row (-8.3% in 2018), the share of its premiums also dropped to 45.8% in the market (vs 51.4% a year ago), while the share of compulsory insurance increased from 22.3% to 25.7%.

The main compulsory class is insurance of liability of vehicle owners with growth by 28.9% and the share of 58% in total compulsory insurance premiums. Although, total number of agreements remains unchanged, the growth of premiums is based on increase of policies' average cost (+24%). The second biggest compulsory class in terms of premiums volume is compulsory insurance of employees against occupational accidents but with a declining trend (growth rate amounted to 8.6% vs 17.5% a year ago).

The best performance was recorded only by life insurance (+53%), at that its growth was covered by 2 factors: increasing number of agreements (33%) and increasing average cost of insurance (almost by 15%). Annuity insurance, as distinct from the first half year of 2017 (growth by 40.8%), this year dropped. Due to that for the most part annuity insurance consists from retirement annuity insurance, product cost increase did not result in increase of the number of agreements. Accident insurance went up by 26.3% (vs growth by 37% a year ago), and here the performance was also provided by the increase of average insurance product cost by 3%.

In voluntary property insurance among its three major classes only Motor Hull saw growth (+21.1%), at that its growth on a large scale resulted from an increase of the insurance cost by about 15%. Property insurance in terms of total GWP decreased by 2.1% due to dropping number of agreements, cost of insurance and tough competition in this segment which weakens the business activity. In voluntary health insurance a slight decrease of product cost on the contrary promoted the growth of premiums (18.4% vs 6.2%).

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