Report by M.Khadzhiyeva, Deputy Chairperson of the ARDFM

Good afternoon, dear participants of the briefing!

Topic of our briefing is new directions in development of the insurance market. Today, we would like to talk about insurance products that have appeared on the market, talk about new opportunities that digitalization gives consumers, and share our immediate plans for development of the insurance industry.

In developed countries, assets of the insurance sector make an average of 7-8% of the GDP, which reflects a high degree of its integration into the economy. In Kazakhstan, this figure remains significantly lower. At the end of last year, it was only 2.4% of the GDP. Despite this, in recent years there has been a positive trend in key indicators of the insurance market.

In 2024, total assets of insurance organizations reached 3.2 trillion KZT, an increase of 25% year-on-year. Over the past five years, this figure has soared by 2.5 times.

Volume of insurance premiums for the past year made 1,507 billion KZT, a 51% surge year-on-year. Over a five-year period, premiums have tripled. Insurance payments for 2024 soared by 22%, reaching 334 billion KZT. Over five years, volume of payments has expanded by 2.3 times.

Among the key factors that contribute to the growth of the industry, one can highlight expansion of the range of voluntary insurance products, increased availability and improvement of conditions for compulsory types of insurance, development of digitalization, and enhancement of the infrastructure of the insurance industry. These factors are becoming the main growth points for the insurance market in the current economic conditions. Let me elaborate on them in more detail.

First. Growing demand for voluntary insurance in Kazakhstan in 2024 indicates an improvement in financial literacy of the population and an increase in trust in insurance products. Growth drivers are pension annuities, voluntary property insurance, including CASCO, and voluntary life insurance.

Since 2024, Kazakhstan has introduced unified voluntary saving system Keleshek. It envisages that for each insurance contract or bank deposit agreement signed within the State Educational Saving System (SESS), in favor of a child who turns 5 this year, the state will accrue start-up capital (60 MCIs for everyone and 120 MCIs for orphans). This will increase the total amount of savings for payment for educational services and, accordingly, improve conditions for SESS participants.

Let me remind you that SESS allows citizens of Kazakhstan to save money for their children's education, annually receiving a state bonus of 5 to 7% and an extra income from an insurance company or a bank. Insurance companies joined the SESS system since 2023. To date, more than 4.7 k insurance contracts have been signed for 1 billion KZT. For comparison, since 2013, banks have entered into 89 k deposit agreements for a total of 30 billion KZT within the SESS.

In order to stimulate our citizens to accumulate funds using the insurance products, in 2025 it is planned to expand guarantees of the Insurance Payments Guarantee Fund to all types of accumulative life insurance. Relevant legislative amendments are under study in the Parliament of the Republic of Kazakhstan. Currently, guarantee of the Fund applies to 10 classes: 8 mandatory classes, pension annuities and SESS agreements.

The taken measures will make life insurance products more appealing to the population and will improve financial security of citizens, prompting them to long-term savings.

This year, it is also planned to adopt extra measures to protect rights of policyholders.

In order to cut insurance costs when receiving bank loans, legislative amendments have been developed according to which fee of insurance agents under insurance contracts related to bank loans must not exceed 10% of the insurance premium amount. These amendments are expected to take effect this October.

The possibility of introducing standardized conditions for mortgage loan insurance is being considered, which will create uniform requirements and approaches to providing insurance services to borrowers. This innovation will ensure transparency and simplify the process of insurance execution.

The Agency has also prepared legislative amendments to establish basic requirements to voluntary insurance contracts. This will ensure protection of the interests of policyholders, eliminate the possibility of imposing unnecessary or unfavorable insurance conditions, entry into knowingly non-payment insurance contracts and unreasonable delays in insurance payments.

We expect that these measures will help fuel confidence of citizens in voluntary insurance and make it even more accessible and understandable.

Second. Compulsory insurance must offer protection against a greater number of risks, while remaining accessible to citizens with different income levels. With this end in view, the Agency, together with insurance market participants, develops measures designed to improve terms and conditions under the current mandatory insurance classes and introduction of new insurance products.

Since January 1, 2024, the compulsory insurance system for workers against industrial accidents (CIA) for workers employed in hazardous working conditions provides for monthly payments from 55 to 63 years in the amount of 4 minimum wages (184,912 KZT). Payments are made from four sources (from the republican budget, from the employer, from pension savings and from insurance organizations) as 1 MW (46,228 KZT) from each source.

Since the launch of the program, almost 12 k workers have taken advantage of the opportunity for early retirement, for whom payments in the amount of almost 26 billion KZT are provided at the expense of insurance organizations, where 4.5 billion KZT have already been paid.

Since 2024, in addition to pre-retirement payments, payments also made within the CIA to employers for preventive measures to improve working conditions. To date, insurers have made preventive payments in the amount of almost 28 million KZT.

Implementation of these measures without increase in insurance rates contributed to the growth of payments under the CIA for 2024 by more than 3-fold as compared to last year, from 15 to 45 billion KZT.

Due to growing liabilities of insurance organizations, a reinsurance pool was created in February 2025 to stabilize the CIA system. The pool allows to effectively redistribute the load among its participants, reduce overall insurance costs and enables policyholders to get more favorable conditions.

Over the past 7 years, 7 new types of imputed insurance have appeared on the insurance market. These include professional liability insurance of lawyers, legal consultants, private receivers, customs representatives, customs warehouse owners and medical insurance for migrant workers.

Since October 2024, imputed insurance of professional liability of medical workers has been introduced, which provides protection for both medical workers and patients. It allows cover possible losses that may arise due to errors or shortcomings in professional activities of doctors. This includes compensation for damage caused to patient's health, as well as coverage of legal costs in case of claims.

This type of insurance is carried out by a single insurance pool, participants of which are 14 insurance organizations.

Since the launch of the pool, 1,620 contracts have been signed, liability of 186 k medical workers has been insured. Total amount of insurance premiums made 979 million KZT. For six months of operation of the single insurance pool, insurance payments have already been made in the amount of 35 million KZT.

In 2025, it is planned to introduce imputed liability insurance for owners of public places. Victims of fires in shopping centers and large public places with an area of ​​​​over 2,000 square meters will receive a compensation for damage. The bill is currently under study of the Parliament of the Republic of Kazakhstan.

For Kazakhstan, introduction of insurance against catastrophic risks is important. As you know, the territory of our country is exposed to the risks of various types of natural disasters. These are earthquakes, floods, high waters, forest fires, droughts and hurricanes.

Sensible earthquakes in Almaty and severe floods last year, which affected 224 settlements in the north and west of our country, confirmed the need to create an additional system for protection of property of citizens in areas with a risk of natural disasters. Today, coverage of the population with such insurance is extremely low – about 3.2% in the country.

International experience demonstrates that effective catastrophic insurance systems are always multi-level and include payments from several sources. Therefore, we also consider various options for public-private partnerships, including budget expenditures, insurance and attracting external financing.

The taken measures will provide citizens with social security and will contribute to development of an insurance culture.

Third. Digitalization is one of the main trends in development of the insurance industry. It allows improve quality of customer service, increase efficiency and cut costs.

Since 2024, Kazakhstan has automated insurance payments for all compulsory insurance classes. Now you can not only enter into an insurance contract online, but also send an application and a package of documents in order to get an insurance payment through the website or mobile application of the insurance company and receive the payment directly to your bank account. This is very convenient, since you do not need to waste time visiting the office of the insurance company and collecting paper documents.

Last year, the first digital insurance product, Europrotocol, was launched. In case of minor accidents, car owners can apply for insurance payment in a simplified manner without calling the traffic police or going to a court. Thanks to Europrotocol, insurance payments for compulsory motor insurance have increased significantly. To date, 2.8 billion KZT have been paid out under the simplified procedure for 15.2 k cases. The average payment period has been cut to 15 calendar days, while previously this procedure took an average of 2-3 months from an accident date. You can apply for a simplified payment through the Europrotocol or DTP.kz mobile applications, or directly through a website of the insurance company.

To streamline the process of choosing the best insurance options for consumers, Insurance Payments Guarantee Fund JSC has launched a test service on its website. It makes it possible to compare terms and conditions of insurance products offered by various insurance companies and calculate their cost. The service provides an access to websites of insurers, where you can read the insurance rules, understand what insurance programs are available and choose the conditions that suit you.

Automation of processes, launch of digital products such as the Europrotocol, and introduction of online services to sign contracts and receive payments have significantly simplified interaction of clients with insurance organizations and made insurance more transparent. Efforts in this area will be continued.

Fourth. Infrastructure in the insurance market is of key importance, as it ensures its stability and efficiency.

Since 2024, the insurance market has introduced a procedure of mandatory pre-trial dispute resolution by insurance ombudsman. Inquiry to the insurance ombudsman has become mandatory for clients of insurance organizations before filing a complaint with the court. For individuals, inquiry to the ombudsman is free of charge and does not require involvement of appraisers or lawyers. In 2024, the insurance ombudsman studied 8,875 cases, 18 of which were appealed in court, and 2 decisions were overturned by the court.

The Insurance Payments Guarantee Fund protects rights of clients of insurance companies licenses of which have been revoked. Its guarantees cover all mandatory and socially significant insurance classes. Even if an insurance company has lost its license, the client will continue to receive insurance payments in full from guarantee reserves of the Fund.

The Fund also makes insurance payments to victims of accidents in which an offender has fled the scene of the accident. Such payments can also be received in a simplified manner through the Europrotocol application.

As the assets and liabilities of the insurance market grow, there is a need to create an actuarial center that will analyze statistics and evaluate risks based on a single insurance database. This will help us more accurately predict trends and needs in various market segments, as well as develop more informed decisions for development of the industry. All these measures designed to improve quality of insurance services, increase transparency and stability of the market, as well as protect interests of citizens and consolidate trust in insurance.