LONDON--(BUSINESS WIRE)--Kazakhstan’s insurance sector has maintained its steady pace of growth since the global financial crisis, buoyed in large part by strong economic development within the country. Yet challenges still remain for insurers, particularly in the reinsurance and life segments, due to recent regulatory shifts.
The premium generated by Kazakh insurers increased by 19.6% and reached KZT 253 billion in 2013, according to a new report from A.M. Best. Further growth could be hindered by the relatively low rate of insurance penetration, with the current level of premium representing just 0.75% of the country’s overall gross domestic product.
A.M. Best’s report titled, “Kazakhstan’s Growth Prospects Remain Good, But Not Without Challenges,” also cites intense competition from the large number of participants operating in the small market as another limiting factor that could affect growth prospects.
The suspension of pension annuity sales in 2013 also created uncertainty, given its past role as a source of growth for Kazakhstan’s life segment. Also, changes in the rules relating the use of reinsurance and the placement of risks in the international market have generated concerns regarding the industry’s ability to retain exposure to potential catastrophes.
Deniese Imoukhuede, associate director, analytics, said: “Profitability in the Kazakh insurance market remains strong, reflecting the low claims activity in the non-life segment and the stable income stream from the industry’s conservative investment portfolio, however there are growing factors that could impact the industry’s ability to sustain its strong performance.”
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