The main priorities of the supervisory policy of the insurance sector for 2024
On February 21, 2024, the Chairman of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market, Madina Abylkasymova, held a meeting with insurance market participants to discuss the priorities of supervisory policy in the insurance sector for 2024.
The meeting was attended by representatives of the Association of Financiers of Kazakhstan, heads of insurance organizations and the Insurance Benefit Guarantee Fund, as well as the Insurance Ombudsman.
Summing up the results of 2023, the Agency noted that the insurance sector is showing growth in all major indicators and has a large margin of safety both in terms of capitalization and liquidity indicators.
At the beginning of 2024, the assets of insurance organizations amounted to 2.49 trillion tenge, an increase of 20.7% over the year. Liabilities increased to 1.59 trillion tenge, which is 23.2% higher than last year. The amount of insurance premiums has reached 1 trillion tenge. The volume of insurance payments for 2023 amounted to 274 billion tenge, an increase of 43.7% compared to last year.
Using the SRES (Supervisory risk assessment system) methodology, which includes qualitative and quantitative risk assessment, the regulator has established a level of supervisory attention in relation to insurance companies. In particular, extreme supervision has been established for 2 insurance companies, 3 - intensive supervision, 7 - detailed supervision, 5 - supervision, 8 - standard supervision.
Based on this assessment, the type and intensity of supervision of insurance companies will be determined in 2024. The supervisory process will actively use the results of consideration of complaints and appeals from consumers of insurance services coming to the insurance Ombudsman and the Agency, as well as methods of collecting data from open sources (Open Source Intelligence), including analysis of the judicial cabinet, reviews of policyholders and news portals.
In 2024, the Agency will continue to work on improving the model of risk-based supervision with an emphasis on the behavioral components of the activities of insurance market participants. This will ensure proper control over various aspects of their activities, including relationships with customers, contractors and competitors.
In 2023, the World Bank, within the framework of the Joint Economic Research Program in Kazakhstan (JERP), assessed Kazakhstan's legislation for compliance with the basic principles of insurance (ICP) established by the International Association of Insurance Supervisors (IAIS).
According to this assessment, 14 of the 25 principles are observed. Based on this, in 2024, the Agency will carry out work on the implementation of expert recommendations regarding the introduction of principles of fair treatment of customers, the development of insurance products taking into account the interests of various categories of consumers and the establishment of responsibility of heads of insurance organizations to resolve consumer complaints.
To ensure the financial stability of insurance companies, the Agency will continue systematic work on the implementation of the international Solvency II standard. It is planned to conduct test calculations to develop new capital requirements (SCR) and own funds of insurance companies.
Control over the provision of financial statements in accordance with IFRS 17 is also a priority of the Agency's supervisory policy. At present, insurers do not have automation of financial statements in accordance with IFRS 17, and large expenses are required to implement individual IT solutions. Therefore, this year, the Agency, together with insurance companies, will consider the possibility of implementing a unified automated system under IFRS 17, including cloud computing for modeling and calculating a set of indicators necessary to meet the requirements of IFRS 17.
This will ease the financial burden on each market participant and ensure transparency and reliability of financial statements.
Digitalization of the insurance sector remains a top priority for the regulator.
Since 2024, the online settlement of insurance claims for all compulsory insurance classes and the simplified procedure for the settlement of an insured event for compulsory motor insurance (Euro Protocol) have been introduced.
The consumer can submit an application and documents for receiving insurance payments through the insurance company's website without visiting the office. All stages of the insurance case settlement process, from the application to the payment, are reflected in the consumer's personal account and recorded in a Single insurance database.
Through the mobile application (Euro Protocol), citizens can apply for an insurance payment in an accelerated mode. In the first month of this year alone, 423 cases of Euro protocol have already been registered, 223 insurance payments totaling 41.6 million tenge have been made. The average payment is 187,550 tenge, the average settlement period is 5 days.
In 2024, the Agency, together with market participants, will consider options for creating electronic platforms (marketplace) to offer consumers the full range of insurance services. This will increase the awareness of customers about the offers of insurance companies, and insurance companies will allow them to take into account the individual interests of customers when developing insurance products.
An important priority in the near future is the introduction of insurance against catastrophic risks in Kazakhstan.
In 2024, work will be carried out to determine the mechanisms of property protection of the population in the event of catastrophic events with the involvement of international experts (definition of an insurance model, development of a roadmap and legislative amendments).
The meeting participants discussed topical issues on improving prudential regulation of insurance organizations, the development of digitalization of insurance services, automation within the framework of the IFRS 17 standard.
At the initiative of the Agency, a working group will be established at the site of the Association of Financiers of Kazakhstan to develop proposals for the development of the insurance market and discuss priority issues identified by the regulator.
The full text of the Main Priorities of the supervisory policy of the insurance sector for 2024 will be published on the Agency's official Internet resource.
The Agency's External Communications Division
+7 (727) 237-10-89, press@finreg.kz