Master of Economics and Business Bissenova R.A.

Kyzylorda State University Korkyt Ata, Kazakhstan

Insurance companies and their activities

Insurance company is a commercial organization, which operates on the conclusion and execution of contracts of insurance based on a license. The insurance companies are foundedin the form of joint-stock companies in Kazakhstan.

The founders and shareholders of the company may be individuals and legal entities - residents and non-residents. The State can also act as a founder of an insurance organization, but only on behalf of the Government. At the same time more than 50% of the share capital organizations, which are owned by the state, cannot be founders and shareholders of the insurance company.

The authorized capital of the insurance company is paid in the national currency. The decision at creating an insurance company shall be issued by the Agency for Regulation and Supervision of Financial Market and Financial Organizations on presentation of the relevant documents:

• an application for permission to create an insurance company

• founding documents

• the decision to establish an insurance company

• Information about the founders and others.

To obtain a license for insurance activities must be submitted to the Agency for Regulation and Supervision of Financial Market and Financial Organizations of the following documents:

• application for a license;

• notarized copies of state registration certificate and statistical card;

• notarized copies of constituent documents;

•documents confirming the full payment of the minimum capital, the minimum requirements for equity capital;

• Information on person appointed to executive positions;

• insurance rules;

• provision of internal audit service and others.

Insurance companies form their resources through premiums and the accumulated funds allocated to the implementation of investments. In Kazakhstan, there are certain requirements to limit the diversification of the investment portfolio of insurance companies, which shows the limits of investments in certain securities.

One characteristic features of the insurance companies is a specific form of fundraising - selling insurance policies. The income they invest primarily in bonds and shares of other companies, government securities. They also provide long-term loans to enterprises and the state.

Besides the main activity of the insurance organization may:

• investment activity,

• issuance loans to its insureds within the limits redemption sum stipulated in the relevant contract savings insurance;

• Sale of the specialized software used for the automation of insurance companies;

• Sale of literature on insurance;

• the sale or lease of assets earlier of acquired for their own use or to be received at its disposal in connection with the conclusion of insurance contracts;

• Consulting on insurance matters;

• organizing and conducting training to enhance the skills of experts in the field of insurance or reinsurance;

• Insurance mediation as an insurance agent.

Insurance companies can create in Kazakhstan also branches, representative offices and subsidiaries.

After the adoption of the Law "On insurance" in 1992, including the small size of the authorized capital, the creation of favorable conditions for their activities, including tax breaks, have given rise to "an insurance boom" in Kazakhstan.

With all the positive impact of the law is necessary to note a number of shortcomings:

• inadequately low level of claims to insurance companies

• Besides the main activities were allowed to engage in business and other kinds of

• Shortcomings of the tax regulation.

"On the organizational and legal measures for the formation and development of the insurance market," was introduced into the system of state regulation of the insurance business from19 April 1994 by the decree of President.

According to the decree in order to get the right to carry out insurance business, insurance company should have a share capital of at least 2.0 million tenge. In addition, it was banned to engage the insurance company by incidental activities. As a result, at the end of 1995, the number of insurance companies dropped to 53.

Table 1 shows the number of insurance companies from 2008 to the present.

Table 1

Insurance Market Structure of Kazakhstan

	01.01.09	01.01.10	01.01.11	01.01.12	01.01.13	01.01.14	01.01.15
Number of insurance orga-nizations, inclu-ding in the life insurance	44 8	41 7	40 7	38 7	35 7	34 7	34 7
Number of insurance bro-kers	12	13	13	14	13	14	15
Number of actuaries	56	63	70	85	82	72	71

On 01.01.2000, 70 insurance companies had a license to carry out its activities; however, by the end of 2000, only 42 companies had carried out insurance activities, including one insurance organization on life insurance. More than 800 companies are involved with insurance activities in the UK, more than 275 in the Netherlands and 972 insurance organizations in Russia.

The policy of the National Bank of Kazakhstan was aimed at increasing the capitalization and financial stability of insurance companies, which led to a reduction in their number. Within one year, 28 licenses were surrendered voluntarily or revoked under compulsion. Some insurance companies merged.

Under the new law, withdrawal from the market of the insurance organization is possible only after the resolution of the National Bank of Kazakhstan, which should monitor the implementation of all its existing obligations, full settlement with creditors.

Reducing the number of insurance companies close to the monopolization of the market and the absence of healthy competition. However, at the same time, an increase in the capitalization of insurance companies contribute to their financial stability and increase the capitalization of the market.

At present licensed activities of 34 insurance companies are carried out in Kazakhstan, including 7 - life insurance, 15 - insurance brokers, 71 actuaries.

One of the problems of insurance companies is that much of it does not have the required number of qualified professionals. At present, the role of professional insurance intermediaries in the financial market is insignificant and inconspicuous.

In addition, there are new participants of the insurance market - actuaries. In this regard, there was a need for an appropriate system of training of experts in insurance with active participation in this matter of public associations of professional participants of the insurance market, especially the Union of Insurers of Kazakhstan.

In addition, an important role can be given to private institutions that could conduct specialization according to professions, due to the increased interest in the insurance market.

Literature

1. Искаков У.М. Рузиева Э. Бохаев Д.Т. Финансовые рынки и посредники. Алматы-Экономика ,2005.

2. К.Жуйриков., Р.Жуйриков., И. Назарчук. «Страхование: теория, практика и зарубежный опыт. Алматы,2008 ж.

3. Джемпеисова Г.И., Чикунов О.Н., Суйеубаева С.Н. Сақтандыру. Оқу құралы. Алматы 2010

4. www.nationalbank.kz