INSURANCE MARKET STRUCTURE AND DEVELOPMENT OF INSURANCE MARKET IN KAZAKHSTAN

Functioning of the insurance market is a complex system consisting of various structural units. The first such party to the insurance market are the direct insurance companies (insurance companies), specialized organization conducting insurance operations. It is here that the process of formation of a special, specific funds available for compensation to those who participate in the creation of these funds. A total of 1989 on foreign sources of such companies in the world, there were over 15 thousands, and the number of them in the last 20 years has not changed. Along with a large number of small volume of insurance liability and assets of companies in the insurance market, received about 100 major insurance corporations whose activities are distinct international character. Therefore, for sufficiently sharp struggle between the insurance companies, though there is no monopolization of the insurance market of a company. The decisive role in this belongs to the presence on the market of a large number of small insurance companies, which do not allow leaders rigidly dictate terms to policyholders.

Economically separate insurance companies build relationships with other insurers on the basis of reinsurance. And reinsurance companies should be allocated for the second invariable participant in the insurance market. Reinsurance market serves a vital factor in the development of the market of direct insurance. At the current level of concentration of production and the enormous cost of property only a mechanism of reinsurance allows insurers to take on insurance risks and losses of such magnitude that far exceed the capabilities of even the largest insurance companies and sometimes individual insurance markets. In this case, the distribution of risk is not only in the national economy, and given the internationalization of economic ties, become international.

    In foreign countries, reinsurance companies are mandatory participants in the insurance market. They are specialized companies that have compared with insurance companies more resistant, more of the volume of the share capital, more resources to invest in various sectors of the economy, business and commerce. At present, the world operates 250 professional reinsurers. Leading companies are "Munich Re" (Germany), 'Svies Re "(Switzerland)," Zheneral Re Group "(USA), etc.

        The participants of the insurance market are the so-called mediators is insurance agents and brokers that their efforts contribute to the promotion of insurance services from the insurer to the policyholder. It is necessary to distinguish between the two forms of mediation. In addition, there is a so-called alternative distribution network of the insurer "is a set of entities (Office Dating, travel agencies, legal services, notary public services, etc.) that act as insurance agents. Along with the services on the main profile of their activities they offer to make certain insurance contracts. Relationship between the insurance company and insurance agents entities governed by general cooperation agreements or contracts with the employees of these companies, which act as part-time agents. Under present conditions prevailing in the dissemination of policies stock insurance companies abroad is a system of general insurance agents. In this case, the vertical level of sales of insurance policies built into the chain:

     Professional insurance agent is determined by the final result, that is, firstly, by the fact of how much revenue insurance payments provided it is signed and existing contracts, and secondly, what impression of the company as a whole were the customers after the signing of the insurance contract and when the insured event. It was from an insurance agent consumer receives information on insurance services, namely it forms a real image of the company to potential policyholders and depend on it in the end, whether the consumer to use the company's services again. Therefore, the effectiveness of any insurance company is more dependent on the performance of primarily low-level in its structure - namely, insurance representative (agent). Noteworthy experience of foreign insurance practices that focus on the proper selection and training of insurance representatives.

  The next person insurance market - various organizations and associations (Association of Insurance Companies). They are usually responsible for compliance by its members and authorized insurance laws regulate their activities in the interests of the policyholders, to monitor compliance with ethical standards, to maintain healthy competition. As the international experience, insurance associations should conduct economic research and prepare for the government and management appropriate practical suggestions and recommendations to develop a commercial insurance policy business. They are obliged to promptly inform the insurer of any interest to their legislation, administrative and arbitral decisions. An important aspect of the activities of insurance associations the foreign trade, representation in international insurance associations, the organization of scientific conferences and symposia. For example, members of the British Association, insurers are 450 insurance companies, whose interests it protects the government, the media.

     Start of Kazakhstan Insurance Institute coincides with the independence of our state. Despite the fact that all the CIS countries have a common base, insurance in each of the states has its own distinctive features. Insurance in Kazakhstan differs from insurance our closest neighbors - Russia and Central Asian states.

For example, in the Republic of Uzbekistan provides that the right of mandatory insurance has only state-owned company, which accumulates most insurance payments. In Russia, the insurance companies involved in the special insurance may be engaged in life insurance and contribute to increased insurance reserves.

The first insurance company in Kazakhstan appeared in 1990. Organizational structures evolved from cooperatives and associations to stock companies.

By 1993, when the adoption of the Law "On Insurance" laid the foundation of our state insurance laws, the number of insurance companies reached 900. True, many of them tied to the insurance just a name. Requirements imposed by law, able to meet only 13 insurers. In the same year, on the initiative of 38 companies was established Insurance Association of Kazakhstan.

Decree of the President of the Republic of Kazakhstan dated 19 April 1994 "On the institutional arrangements for the formation and development of the insurance market" given the right to establish a system of state regulation of insurance. Within the Ministry of Finance established the Department of Insurance Supervision.

In 1994-1998, the new Law "On Insurance" and the introduction of compulsory insurance of civil liability of vehicle owners. The concept first saw the light of the development of the insurance market. The authorized capital of the insurance companies had to be 40 000 MCI or about 20 million tenge. The number of insurance companies in this period ranged from 70 to 150.

A new stage in the development of the domestic insurance industry has become the presidential decree "On measures to further optimize the government" of 30 June 1998, according to which the functions and powers of the supervisory authority was transferred to the National Bank. At this moment in Kazakhstan were 72 insurance companies.

In November 2000, the Decree of the President of the Republic of Kazakhstan № 491 was adopted by the State program of development of insurance for 2000-2002. In a diverse series of regulations adopted to regulate the insurance market over the period of the state of independence, was the first program to be specified by the prospects of this sector of the economy and public policy in this area.

Law of the Republic of Kazakhstan "On insurance" was adopted on 18 December 2000 for № 126-2. The law defines the basic provisions for the implementation of insurance as a form of business, especially the development, licensing, regulation, business interruption insurance (reinsurance) companies, insurance brokers, the conditions in the insurance market of other individuals and entities, the task of government regulation of the insurance market and principles of supervision the insurance business.

Prior to 2004.in Kazakhstan regulation of insurance companies is the National Bank, which took a number of measures relating to the finances of insurance companies, asset management in the insurance market, which are aimed at creating a more civilized market. One of the most important measures - increasing the minimum capital requirement for insurance companies to KZT 100 million, resulting in a reduction in the number of insurers. This measure is aimed at improving the reliability of insurance companies at the expense of small insurers.

    By Presidential Decree № 1270 "On further improvement of the system of state regulation" from January 1, 2004 the basic functions of regulation and supervision of banking, insurance activities and work pension and investment funds of the Agency of the Republic of Kazakhstan on regulation and supervision of financial market and financial organizations. To the Agency over the functions of control and regulation of the insurance market.

One of the first documents developed by the Agency, the State program was the development of insurance market in the Republic of Kazakhstan for 2004-2006, approved by the Government on July 1, 2004, № 729.

Thus, from 1998 to 2004 was introduced "Prudential regulations and other binding rules and limits", the law "On insurance", and also established the Agency of the Republic of Kazakhstan on Regulation and Supervision of Financial Market and Financial Organizations and the State Programmer development of the insurance market in the Republic of Kazakhstan. Number of regulations developed by the Department of Financial and Insurance Supervision National Bank, reached number 46, the number of insurance companies for the period decreased to 32. First of all, the reduction in the number of insurance companies due to increased legal requirements for insurance undertakings, including their financial stability and ability to pay and, as a consequence, the withdrawal from the market for being unreliable, financially unstable organization of insurance that allowed the systematic violation of the law on insurance business.

For the 1997-2004 year, the value of the ratio of premiums to GDP increased from 0.19% to 0.67% of GDP. In the republic in 2004, the ratio of premiums per capita totaled KZT 2629.6 per person.

To ensure the successful implementation of the program of development of the insurance market of Kazakhstan 2004-2006, as well as the program for the further expansion of social reforms in the Republic of Kazakhstan for 2005-2007, 24 December 2004. was created by JSC "Life Insurance Company" State Annuity Company "with absolute participation in the authorized capital of the state. Ownership and use of the state stake was transferred to the Ministry of Labor and Social Protection

If before 2002 the structure of the insurance market of the Republic of Kazakhstan was represented only by insurance companies, starting in 2002, there were brokers, actuaries, auditing organizations that have a license for the audit of insurance companies, and insurance companies with the participation of non-residents.

The presence of these regulatory organizations, provide an opportunity to check the activities of any insurer any insurance organizations, thereby increasing confidence in insurance.

For 1997 and 2004. Total equity of insurance companies has increased by 2169%, or 22.8 billion. However, from 1997 to 2004, assets of insurance companies increased by 40.3 billion tenge.

Dynamics of the insurance reserves of the country for eight years as a whole tends to increase.

With regard to the activities of insurance companies in the insurance market, the positive fact is the growth of insurance premiums as one of the most important indicators of competitiveness and confidence of policyholders to the insurer. So, in 2004 collected about 40 billion, one hundred by 38.4% or 11.1 bln more than the amount collected in 2003. If we assess the market for the year 2004, then the share of ten insurance companies account for 75.5% of the total premium collected.

Loss ratio (the ratio of insurance claims made and collected premiums) in 2004 was 16.7%, an increase of 2.2 points, compared with 2003, the figure for the whole entire period of the insurance market can be said is almost no change (if in 1997 16.0%, in 2004 - 16.7%). But if we consider them of branches of insurance, life insurance, this indicator has a tendency to decrease (from 117.4% in 1997 to 0.7% in 2004) and it is normal, because the industry is cumulative, ie . at present only the contributions accumulate. And there is general insurance. Increase this figure, from 13.2% in 1997 to 17.5% in 2004, which is also, in turn, is a positive thing.

Actually, as of January 1, 2004 in the insurance market of Kazakhstan carried out by licensed activities 32 insurance companies (including: 1 - Life Insurance, 6 - with the participation of non-residents of the Republic of Kazakhstan), 6 insurance brokers, 28 actuaries and 34 auditing organizations licensed to perform the audit of the insurance organization.

For the 2004-2009 insurance premium per capita increased by KZT 6437 and totaled 2009 9102 tenge ($ 74 U.S.). Including the cost of life insurance population on average is 378 tenge.

The share of insurance premiums to GDP is much lower than the average of those countries (2.8%). Total insurance premiums as a percentage of GDP in 2009 were 0.9%. These figures indicate that the insurance market of Kazakhstan is still in its infancy and has great potential for growth.

Insurance premiums per capita in the field of "life insurance" in the CEE countries are 80-270 dollars in the U.S. - 1922 USD, Canada - 1387, Great Britain - 5730 dollars.

In general, summing up, it may be noted that, despite the positive development of insurance companies, some statistics indicate lack of effectiveness of measures taken to improve the financial sustainability of the expansion and improvement of the quality of the insurers.

The problem of low participation rates in the insurance because the insurance companies pay little attention to public awareness of the results of their activities, providing the necessary information about existing and new types of insurance, making quality and content of advertising. Not enough is being studied and is working to build consumer demand for insurance services to a broad explanation of the mass media major consumer of insurance services.

World experience shows that the amount of insurance markets are growing in proportion to the economy. In this regard, Kazakhstan in today's insurance market has great potential development of traditional life insurance services and expansion of their new species.

As of January 1, 2011 in the insurance market of Kazakhstan is carried out activities 44 licensed insurance companies, 8 of them - in the field of "life insurance", 36 - in the field of "general insurance".

State participation in the solution of problems of the insurance market gives urgency insurance and insurance, increases the protection of the legitimate interests of policyholders. In recent years, improved financial discipline and accounting in the insurance companies, the list and the level of services provided by insurance.