NURZHAN Y. ALIMUKHAMBETOV
Kazakhstan has a young insurance sector, in which life insurance is even younger. For us, the main thing is the development of pension insurance. The second type of insurance we work on is designed for people injured at work, which is mandatory. Once a year every company insures its employees against accidents. Today, GAK is a brand of reliability and stability in the life insurance market. Being socially responsible and strictly adhering to its mission, GAK is actively involved in implementing the best solutions and standards for life insurance in Kazakhstan. As the only state-owned life insurance company, GAK serves as an analyst and consultant on annuity insurance. GAK insurance was created in order to successfully implement a program for the development of the insurance market in Kazakhstan, as well as a program for social reform in the country. The company was originally designed to solve a number of issues in the social sphere such as realizing a citizen’s right to a pension from insurance companies on the basis of retirement life annuity contracts. Until 2009, a little more than 1,700 people had opted for such plans, but by 2010 the number increased almost four fold to 6,308 people. At the same time, one in every four contributors at the age of 55 signed a pension annuity contract with GAK, which shows their confidence in the company.
We don’t position ourselves in certain segments. Our target is to provide the best service in the market in terms of issuing policies, identifying claims, and offering a wide range of insurance products. Most of our business is corporate, but we also operate in the retail market. We do not open many offices around the country, nor do we advertise. In nine years, we haven’t implemented any advertising campaigns and in 2011 we became the number one in voluntary motor (CASCO) insurance in Kazakhstan. We succeeded to attract the attention of a number of vehicle owners in the country. We continue putting a lot of effort in the development of services for this segment. Our customers see that London-Almaty provides the best quality services and they share this information with their friends and family; that is the reason behind our success. It was a management idea to become a leader in the market not by means of opening dozens of offices or putting money into advertising, but to encourage our happy customers to give London-Almaty publicity by word of mouth. Our main clients are SMEs and retail, but we are not present in every sector due to the local nature of the market. Decisions on insurance in the big companies do not typically depend on the quality of insurance company services; instead clients are told to buy insurance with some particular insurance provider, and very often they do not make their choices voluntarily.
Today, the retail insurance market remains the most stable source of insurance premium inflows. Under present economic conditions, this insurance segment is developing in a quite predictable and natural way. The motor owners’ civil liability compulsory insurance (OGPO) is leading as per the volume of insurance premiums. Thus, according to the Committee for the Control and Supervision of the Financial Market and Financial Organizations of the Republic of Kazakhstan, as of April 1, 2012, the insurance premium inflow for the OGPO segment totaled more than KZN5.5 million. The increase in 1Q2012 amounted to only 2% over the same period in the previous year. Therefore, the growth rate is not as high as before. This suggests that this insurance segment has already become stable, with each insurance company taking its position in the market. The success of retail insurance mainly depends on infrastructure, such as an advanced agent network and information facilities. These are all very important components in promoting and serving retail insurance products. The Nomad Insurance agent network is one of the largest. Today, over 2,500 agents are working throughout the country in 17 different cities. When talking about retail insurance, it is worth mentioning voluntary retailing. I would like to point out that people have started showing great interest in voluntary types of insurance.
SERGEY P. LAVRENTYEV
There are facts, forecasts, and desires. Today, the fact is that we are working not only with corporate clients, but also with retail customers; people with average incomes who have an inexpensive car that is subject to mandatory insurance. BTA Insurance also has a second type of retail customer, and they tend to have above-average wealth and are looking to insure their property and expensive cars. There are the voluntary types of insurance, and of course we have our corporate clients; legal entities that insure their property on a mandatory and voluntary basis. As per forecasts and desires, an analysis of GDP dynamics including wage increases, inflation, and other macroeconomic indicators suggest an increase in business activity, not only in the corporate field, but also an increase of citizens with incomes above the average. We want to attract these consumers more, because we see that this is where our future is. We are developing our service side and will be introducing advanced technology to enhance the experience of our customers. Currently, our insurance portfolio is quite diversified, and none of our insurance segments take more than a 22% share. Oddly enough, we have very high demand for our voluntary health insurance program, although not from individuals. In fact, it is companies that provide social benefits to their employees that request this program the most.
The government puts a lot of effort into decreasing taxes for SMEs, while opening up business procedures and decreasing the number of documents needed in order to start doing business. It is also working on not bothering young entrepreneurs with excessive inspections. The authorities are also providing loans and student credit at low interest rates. This will also create streams of development in the SME segment, allowing people to open up their own hairdressing shops, bakeries, kindergartens, and markets. This is where we see a big potential, as young entrepreneurial companies are very vulnerable, with tight margins. I also see high demand for health insurance because the country is not yet a good platform for medical insurance. There are three ways to finance medical insurance: through the state, private companies, or a mix. There is no mixed model here yet, but one day, industry heads will have to get together and come up with a way of bridging the gap between the two sectors. The corporate market is huge, and there is a lot of competition. I’m more interested in profit over market position, which are two aspects that must be balanced properly. This can be achieved by targeting less competitive but segments with more potential. The country will have no other chance but to develop this way. While the oil and gas industry is moving backward due to oil prices, SMEs are growing.
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