XPRIMM: How would you describe development of the insurance market of Kazakhstan in 2024? What key trends and events would you note?

Marina SHIPOVALOVA: In 2024, the insurance market of Kazakhstan saw significant growth and structural changes. According to the Agency for Regulation and Development of the Financial Market, total GWP reached KZT 1.5 trillion, which is 51% more y-o-y, of which KZT1.4 trillion collected under direct insurance contracts.

The key trend was the growth in demand for voluntary insurance, especially for pension annuities and voluntary property insurance, including Motor Hull. This indicates an increase in the financial literacy of the population and growth of trust in insurance products. At the same time, it should be noted that the main factor in the growth of voluntary property insurance (including Motor Hull) and accident insurance is the growth of lending and the requirement of banks to insure collateral and borrowers.

Last year, there was also active digitalization of insurance services, both in terms of sales and claim payment, which improved availability of products for a wide audience. Introduction of new technologies has simplified issuance of insurance policies and claim settlement.

If we look at the contribution of insurance segments to the total GWP, it should be noted that the main growth driver was life insurance, as the share of life companies already reached 57.3% vs 37.8% a year earlier.

Total life GWP in 2024 almost doubled (+93%), mainly thanks to the increased demand for voluntary personal insurance products (+101%). It is interesting to note that pension annuities (+230%), as well as accident insurance (+189% or KZT 88 billion) recorded triple-digit growth.

Compulsory insurance saw a more moderate growth (+56%) entirely attributable to employers' liability compulsory insurance.

Life insurance led in terms of growth in key indicators among all financial market segments in 2024.

Life insurance liabilities grew to KZT 1.2 trillion (+51%), mainly due to the growth of the best estimate of expected cash flows (+56%), margin for services provided by insurance contracts (+60%) and liabilities for incurred losses (+55%).

Despite an increase in the number of market participants to 9 (BCC Life was created in 2024), life insurance concentration remains high: the top 5 in terms of asset size account for 88% of the sector’s total assets, vs 86% a year earlier (scale effect).

In non-life insurance total GWP increased by only 3.0% in 2024. Here, the drivers were property insurance (+14%), underpinned by a jump in mortgage lending (+25%) and growth in housing construction (+6.4%), as well as health insurance (+20%) against the backdrop of increased employment (+127.2 thousand) and wages (+11.3%) in Kazakhstan.

At the same time, compulsory motor vehicle liability insurance (-12%) decreased significantly due to the introduction of flexible tariffs, as well as professional liability (-56%) driven by high base effect of the previous year.

Key indicators of the non-life market in 2024 recorded moderate growth supported by high economic activity, acceleration of lending, and increased inflationary processes in the economy.

Sector liabilities increased by 16.7% mainly due to an increase in liabilities for incurred losses (+29.6%), liabilities for the remaining part of the insurance coverage (+17.7%).

Broadly speaking, given the expected high economic activity, positive impact of credit insurance (mortgages, cars) and relatively low insurance penetration (the ratio of insurance premiums per capita KZT 32.2 thousand to the average salary of KZT 435 thousand is only 7.4%) the sector will continue to show sustainable growth, including due to expansion of the product line, digitalization and interest in insurance products from legal entities and individuals.

XPRIMM: In your opinion, which insurance classes hit an all-time high and why? Which insurance products were the most popular?

Marina SHIPOVALOVA: In non-life insurance the demand for insurance products in 2024 recorded an upward trend in all segments: premiums increased in compulsory insurance (+2.6%), voluntary personal insurance (+11.8%) and voluntary property insurance (+1.8%).

The growth of insurance penetration can also be reflected in a significant increase in the number of concluded non-life contracts: in 2024, they amounted to 10.5 million units (+694 thousand).

In terms of entities, the bulk remains with individuals (79% vs 83% a year earlier), but the share of legal entities continues to grow (up to 21% from 17% previously).

Segment-wise, there is a decrease in the share of compulsory insurance (from 79% to 75%) accompanied by an increase in voluntary personal (from 9% to 13%) and property insurance (from 11% to 12%).

Life insurance companies are gradually beginning to play an increasingly significant role in the formation of “long” money in the economy. I note that in 2024, the life insurance sector saw rapid growth: GWP doubled, while paid claims, assets and liabilities of life insurance companies increased by half.

With a relatively small product line (life insurance companies offer services in two classes of compulsory insurance - employers' liability compulsory insurance and travel insurance; and six classes of voluntary insurance - life insurance, annuity and pension annuity insurance, the State Education Savings System, health and accident insurance) life insurers now occupy more than half of the insurance market.

In 2024, life insurers concluded over 12.5 million contracts, which is significantly higher than both the similar result for non-life companies (10.5 million contracts) and last year's figure (7.1 million contracts at the end of 2023).

In terms of entities, an increase is observed among individuals: their share increased to 97.8% from 93.6% a year earlier. Accordingly, the share of legal entities fell from 6.4% to 2.2%.

At the same time, the driver of the life insurance sector in 2024 was voluntary personal insurance products: pension annuity insurance (47% of total GWP) and accident insurance (14%).

XPRIMM: How would you describe the dynamics of paid claims during the last year? Were there any particularly large losses and how did the insurance sector cope with them?

Marina SHIPOVALOVA: In 2024, the insurance market of Kazakhstan recorded a noticeable increase in paid claims, which reflects both an increase in demand for insurance products and an increase in claim settlement in key segments. According to the Agency for Regulation and Development of the Financial Market, total paid claims amounted to KZT 334 billion, which is 22% more y-o-y. This uptrend was accompanied by an increase in total GWP to KZT 1.5 trillion, as a result, the share of paid claims in premiums amounted to about 22.2%.

The largest increase in paid claims in absolute values was observed in employers' liability compulsory insurance. This is directly related to the introduction in 2024 of a new system of social payments for employees engaged in harmful working conditions. Introduction of additional payments increased the burden on insurers but made it possible to strengthen the social function of insurance and increase the coverage of labor risks in industry and other sectors with a high level of industrial injuries.

A significant increase in paid claims was also recorded in compulsory motor vehicle liability insurance, where total payments reached a record KZT 80 billion. As a result, the loss ratio in the segment amounted to 95% for current policies, even though the targeted loss ratio set by the regulator for this class of insurance is 65%. Among the factors that influenced paid claims growth, one can highlight mass introduction of the European Accident Statement and digitalization of claim settlement, which simplified and accelerated filing of claims for road accidents, which, in turn, increased registered losses.

Voluntary personal insurance also contributed to the overall growth in payments. In this segment, paid claims increased by almost 30% and reached KZT 99.2 billion. A significant part of these payments was made up of pension annuities and accident insurance, especially in the corporate segment. Such growth is explained by both an increased interest of the population in long-term savings instruments and growth in the number of concluded corporate contracts.

In voluntary property insurance paid claims amounted to KZT 94 billion, which indicates an increase of more than 28%. Here, a large role was played by insurance cases related to damage to real estate and vehicles, especially against the backdrop of adverse weather conditions and increased activity in the retail segments, rather than large losses in the industrial segment.

It is worth emphasizing that despite the overall growth in paid claims, the insurance market remained stable thanks to an effective reinsurance system, as well as an increase in reserves and digital transformation. Companies were able to fulfill their obligations to clients on time, which positively affected the image and level of trust in the industry.

XPRIMM: What can you say about the assets in the insurance sector, did assets grow last year and what supported their growth? How did their structure change? How much did insurers' profits grow?

Marina SHIPOVALOVA: Total assets of insurance organizations reached KZT 3.2 trillion, which means an increase of 25% y-o-y. The main growth factors were an increase in GWP and income from investment activities.

The asset structure changed towards an increase in the share of highly liquid instruments and government securities. This ensured stability and reliability of the investment portfolio of insurance companies.

The assets of non-life insurance companies in 2024 increased by 5.2%, to KZT 1.4 trillion, which is 46% of the insurance market assets, but only 1.04% of GDP. In the asset structure, the main increase was observed in the securities portfolio (+16%) against the background of significant growth in stock market instruments in 2024, while a noticeable decline was noted in reverse repo transactions (-56%) supported by a structural liquidity surplus in the system and changes in the monetary policy instruments of the National Bank (liquidity is not withdrawn through repo transactions).

At the same time, the role of the key 8 players has increased: their share of assets now amounts to 92% from 90% previously, underpinned by the favorable influence of the scale effect.

The assets of life insurance companies increased to KZT 1.6 trillion (+50%), and now make up 54% of the insurance market total assets, while a year earlier their share was 45%.

As of January 1, 2025, 86% of the asset structure were securities, amid the growth of the stock market and investment of part of the collected premiums. Next come cash and placed deposits - 5.7% and repo transactions - 5.7%, which are necessary to maintain current operations and manage "short" liquidity.

Overall, in 2024, the profit of the insurance market amounted to KZT 216.2 billion, which is 18.2% more y-o-y. It should also be noted that ROA (return on assets) was 7.7%, and the ROE (return on equity) was 23.4%.

XPRIMM: Were there any regulatory changes in 2024 that affected the insurance market?

Marina SHIPOVALOVA: In 2024, the insurance market of Kazakhstan underwent significant regulatory changes aimed at increasing transparency, strengthening consumer protection and stimulating development of new insurance products. These measures were implemented by the regulator and cover various aspects of insurance activities.

In particular, the regulatory changes affected the following areas:

Expansion of guarantees of the Insurance Payments Guarantee Fund: It is planned to expand the Fund’s guarantees to all types of accumulative life insurance, which will increase public confidence in these products and stimulate long-term savings.

Establishing limits on insurance agent fees: Legislative amendments have been developed to limit insurance agent fees under insurance contracts related to bank loans to 10% of the insurance premium amount. This is aimed at reducing borrowers' costs when applying for insurance policies.

Implementation of standardized conditions for mortgage insurance: A possibility of introducing uniform requirements and approaches to provision of insurance services for borrowers is being considered, which will ensure transparency and simplify the process of purchasing insurance.

Establishing basic requirements for voluntary insurance contracts: Legislative amendments have been prepared aimed at protecting interests of policyholders, eliminating the possibility of imposing unnecessary or unfavorable insurance conditions and unreasonable delays in insurance payments.

Implementation of online claim settlement: In 2024, online claim settlement was introduced for all mandatory insurance classes, including a simplified procedure for settlement of compulsory motor insurance cases (European Accident Statement). This allows consumers to submit applications and documents for insurance payments through insurance companies’ websites without visiting offices.

Strengthening the role of the insurance ombudsman: Since January 1, 2024, the insurance ombudsman has become an institution for mandatory pre-trial settlement of insurance disputes. An appeal to the ombudsman is a necessary step before filing a lawsuit against actions of an insurance company. The decision of the insurance ombudsman is mandatory for insurance companies.

Implementation of international standards: Work on implementation of the international standard Solvency II and IFRS 17 continues. In 2024, test calculations were made to develop new requirements for capital and equity of insurance organizations, and a possibility of introducing a unified automated system for IFRS 17 is being considered.

In addition, initiatives were implemented to stimulate development of insurance, including introduction of new products and expanding access to insurance services for various categories of the population.

Educational savings insurance "Keleshek": In 2024, a unified voluntary savings system "Keleshek" was introduced that provides for accrual of start-up capital from the state under insurance contracts and deposits concluded within the framework of the State Education Savings System. This will increase total amount of savings to pay for educational services.

Pre-retirement annuity for workers employed in hazardous working conditions: Monthly payments for the age from 55 to 63 years in the amount of 4 subsistence minimums have been introduced for workers employed in hazardous working conditions. Payments are made from four sources: the republican budget, employers, pension savings and insurance organizations.

Imputed professional liability insurance for medical workers: Mandatory professional liability insurance for medical workers was introduced, ensuring protection of both patients and medical workers.

These changes and innovations are aimed at increasing availability of insurance services, strengthening social protection for citizens and developing the insurance market of Kazakhstan.

XPRIMM: What challenges do insurers in Kazakhstan face in 2025? Were any new trends set in 2024 that continued in the current year?

Marina SHIPOVALOVA: In 2025, further development of digital sales channels, introduction of innovative products that meet changing needs of customers, and strengthening financial stability remain the main tasks for insurers.

Trends that began in 2024, such as personalization of insurance services and integration of technology into risk assessment and customer service processes, will continue to gain momentum this year.

Another important area will be development of life insurance and pension annuities, which will ensure long-term financial stability of the population and improve social protection.

The regulator will continue to work on implementation of regulatory approaches to Solvency II and will consider expanding the scope of activities of mutual insurance companies, providing them with additional functions in voluntary insurance.

In 2025, the regulator, together with the Government of the Republic of Kazakhstan, will continue to create a system for protecting citizens in regions prone to natural disasters from the risk of disasters with development of a law on compulsory insurance of real estate.