LONDON--(BUSINESS WIRE)--Market conditions in the Kazakh insurance market remain difficult, due largely to the challenging economic environment, according to a new AM Best report. In particular, the lower price of oil, a commodity on which Kazakhstan remains dependent, and the slowdown in Russia have muted economic growth. Insurers also face a frequently changing regulatory landscape.
The Best’s Special Report, titled “Kazakhstan Insurance Ratings: Benchmarking,” states that competition remains strong, especially in the non-life segment, although the number of insurers has declined in recent years, as some have merged and others have left the market. Over the longer term, the decline in the number of market participants should lead to a more favourable operating environment for the remaining insurers.
Yevgine Asatryan, senior financial analyst, said: “The non-life market is highly competitive and fragmented, with 20 active players competing for gross written premium of approximately USD 700 million. The number of market participants has declined slightly over the last few years due to consolidation and the closure of some companies. Consolidation in the insurance market has resulted largely from mergers and acquisitions in the banking sector. In addition, in 2019, the National Bank of Kazakhstan canceled the licences of two non-life insurance companies, citing non-compliance with regulatory requirements.”
AM Best notes that regulatory risk is high as the Kazakh insurance market is relatively young. Catherine Thomas, senior director, analytics, said: “The regulatory framework is still developing, with frequent changes that can materially affect different aspects of insurers’ operations. For example, regulations were introduced in 2018 prohibiting non-life insurers from reinsuring workers’ compensation business, with implications for life and non-life companies.”
The report discusses the key considerations in AM Best’s building block ratings approach for insurance companies in Kazakhstan. The analysis is based on data for companies that were rated as of March 1, 2019. Most of AM Best’s rating actions in 2018 were affirmations, due to insurers’ maintaining solid risk-adjusted capitalisation in most cases.
To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=284135.
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