Kazakhstan insurance resilient as economy recovers: AM Best

The insurance coverage market in Kazakhstan confirmed a excessive diploma of resilience to the difficult financial situations introduced on by the COVID-19 pandemic, in accordance with analysts at AM Greatest.

In a brand new report, the ranking company additionally stated that it expects the nation’s business to face up to financial uncertainty pushed by the navy battle in Ukraine.

In 2021, Kazakhstan’s insurance coverage market reported substantial development with whole gross written premium rising by 43.4% to KZT 815 billion (USD 1.9 billion), underpinned by elevated buyer demand.

As well as, additional developments within the phase’s regulatory and legislative atmosphere facilitated the event of recent merchandise, prompted extra environment friendly customer support, and had a constructive impression on shopper belief via enhanced transparency.

AM Greatest reviews that the market-wide nature of those drivers created constructive momentum that resulted in a variety of insurers reaching top-line development.

Particularly development was pushed by the life phase, which reported a 66.0% improve in premiums, helped by demand for various funding and pension options.

However demand for merchandise together with well being, property and motor additionally elevated and supported non-life phase development of 28% to KZT 435 billion (USD 1.0 billion).

potential exposures to the battle between Russia and Ukraine, AM Greatest notes that the funding portfolios of native Kazakhstan carriers don’t include vital holdings of Russian monetary property, so any valuation losses—or deterioration of the credit score high quality of such devices—should not anticipated to have a cloth impression on their solvency and monetary energy.

Nevertheless, The Nationwide Financial institution of Kazakhstan elevated the bottom rate of interest to 14% in April 2022 (from 9.75% as at year-end 2021) in response to the rising inflation, moreover fueled by the battle.

This led to a average devaluation of native fixed-income securities, which, coupled with the volatility in Kazakh equities, precipitated a discount within the regulatory solvency margins of most insurance coverage firms within the second quarter of 2022.

And AM Greatest additionally warns that sanctions imposed on Russia may probably spill over to its closest financial allies, comparable to Kazakhstan, which may then result in lowered entry to worldwide reinsurance capability for Kazakh cedants, liquidity pressures and operational issues.

Moreover, the heightened geopolitical danger may additionally delay the progress of some region-wide initiatives introduced in 2021, such because the incorporation of the Eurasian Reinsurance Firm, which was anticipated to be capitalised by member states of the Eurasian Intergovernmental Council and worldwide monetary establishments.