Kazakhstan Insurance Report Q2 2016
BMI View: We expect Kazakhstan's insurance market to continue developing at a fast pace through thenext few years, despite a series of economic headwinds including falling oil prices and a depreciatingnational currency. The rapid growth of the market owes much to its under-development, having beenrestrained by a lack of private enterprise during the Soviet era. The life insurance premiums in particularare set to see rapid expansion, growing by around 20% a year on average in local currency terms. Personalnon-life lines will also benefit from steady growth in income levels and the expansion of the country'smiddle-class demographic. Growing demand for insurance will pave the way for new entrants into themarket from overseas who will be able to take advantage of a lack of competition and the absence ofmultinational operators at present.
Key Updates And Forecasts
January 2016 saw Kazakhstan's deposit insurance fund raise the interest rate on local currency depositsfrom 10% to 14% following further depreciation of the tenge during the first few weeks of the year. Itsrecent devaluation has sparked concerns that investors may be unwilling to make deposits based in localcurrency.
We have revised our medium-term forecasts for life insurance growth downwards slightly since lastquarter, in reflection of downside risks linked to falling oil prices and short-term pressures on economicgrowth. Nevertheless, we expect premiums to grow by a rapid 22.2% a year on average in local currencyterms through to 2020, when they will reach KZT229bn.
Growth in the non-life sector will be more modest, at 9.3% y-o-y over 2016-2020, reaching KZT350.7bnat the end of the forecast period.
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