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Weak Growth for Kazakh Insurers

Tuesday 24 July 2018

PARIS (Satrapia) — Swiss Re Institute’s latest sigma examines the development of life and non-life premiums in the global primary insurance industry in 2017. Overall, global insurance premiums increased 1.5% in real terms to nearly $5 tln. Global life premiums increased 0.5% to roughly $2.7 tln, while global non-life premiums rose 2.8% to approximately $2.2 tln.

Life insurance premium growth in the Middle East, Central Asia and Turkey slowed to 7.5 % in 2017 (2016: 15%). Life business in the region has been sluggish due to slowing economic growth and lower disposable income after the governments cut subsidies on utilities and gasoline. Non-life premium growth in the region slowed to 2.1% in 2017 (2016: 10%) driven by sluggish growth in Turkey and Saudi Arabia.

According to analysts, Kazakhstan with its ambitions has a great potential for the formation of the insurance industry: the country is compared with Turkey (29.9%) and India (31.8%) in terms of development, while the average for developing countries is only 10%.

Despite the fact that the Kazakhstan insurance market is rapidly gaining momentum, and just recently S&P Global Ratings upgraded the ratings of Kazakh insurance companies on the national scale after reviewing the criteria, where Eurasia’s rating was the highest among all private financial institutions in Kazakhstan, to us still have something to work on and what to strive for. Our foreign insurance market is closely watched by foreign analysts from the magazine Sigma, coming out under the auspices of a Swiss reinsurance company Swiss Re, which on an annual basis compares the insurance markets of countries around the world.

The authors of the analysis note a weak growth of the total volume of insurance premiums of Kazakhstan insurers in the result of 2017, which amounted to only 2.7%, which hardly exceeds $1 bln (332 billion tenge) at an average exchange rate of 326 tenge per dollar in 2017, compared to with the results of 2016, where the growth was 22.7% — $945 mln (at the average exchange rate of 326 tenge per dollar in 2016). According to the analysis, when comparing the number of premiums collected a year earlier, Kazakhstan has outstripped countries such as Pakistan, Kuwait, Cyprus and a number of Caribbean countries in terms of the total volume of insurance premiums.

However, despite the fact that the Kazakhstan insurance market is ahead of many regional countries, it could not outrun the insurance market of Ukraine, where the economic and political situation leaves much to be desired. In 2017, more than $1.6 bln of insurance premiums were collected there (532 billion tenge). In Russia the amount of insurance premiums exceeds $21 bln (almost 7 billion tenge).

One of the important criteria that guided analysts is the ratio of the volume of the insurance market to the population of the country. And here insurers show growth: in 2017 insurance premiums per capita in developing countries increased by 13%, whereas in 2016 only by 9.5%. In neighbouring Russia, the figure rose to $152, while in Kazakhstan it was only $61 (19,886 tenge at the average exchange rate of 326 tenge per dollar in 2017). For comparison: in developed countries, the insurance premium per capita is $1,500-7000.

If we compare the pace of development of the economy of Kazakhstan with other countries, the year for Kazakhs was sluggish, and its results can be called not very encouraging — from the 55th place by the results of 2016 Kazakhstan rose only one position, taking 54th place, thus ahead of Hungary and Angola, rich in resources.

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