/IRBIS, Assel Omarova, January 26, 05/ - Kazakhstan agency for financial market and financial organizations regulation and supervision (FSA) in its scheduled press-release dedicated to preliminary data about condition of the republic's financial market has characterized the country's insurance market as of January 1 of 2005.

According to FSA's data, by the mentioned date 36 insurance (reinsurance) organizations had licenses for conducting of insuring activity. Two organizations have licenses for life insurance. As of January 1 there were 8 insurance brokers, 27 actuaries, 34 auditing organizations and 68 auditors, who had licenses for auditing insuring activity, in the country.

In 2004 FSA gave licenses for conducting insurance activity on "general insurance" to the following again founded insuring organizations: State insurance corporation on export credits and investments insurance JSC (100% participation of the state in authorized capital), IC Nomad Insurance JSC, Grain insurance company JSC. In "life insurance" branch there was given a license to Valut-Tranzit Life JSC. Besides, in the past year there was given 1 license for re- insurance activity (State insurance corporation on export credits and investments insurance JSC).

As of January 1 of 2005 there were 122 branches of insurance organizations. Within 2004 the authorized body gave permission for opening of 13 branches, and also permission for opening of a representative of State insurance corporation on export credits and investments insurance JSC in Astana city.

Besides, there are 2 representatives of foreign insuring (re-insuring) organizations: representatives of Ingosstrakh and Kazakhstan-Rosno of Russian insurance people's society "Rosno" OJSC.

Within 2004 there were given 2 licenses for conducting activity as an insurance broker, 2 licenses for the right to conduct actuarial activity, 1 license to a physical person for the right to audit insurance activity, effect of 3 licenses for the right to conduct actuarial activity was stopped.

In 2004 total assets of insurance companies increased by 113.0% to KZT44.1 bn. Total shareholders equity grew by 165.6% to KZT23.9 bn. Insurance reserves equaled to KZT14.7 bn.

Volume of insurance premiums according to results of 2004 totaled KZT40.0 bn. and increased in comparison with 2003 by 38.4% (KZT11.1 bn.), including: on compulsory insurance - by KZT1.6 bn. to KZT4.5 bn., voluntary personal insurance - by KZT1.8 bn. to KZT4.6 bn., voluntary property insurance - by KZT6.3 bn. to KZT31.0 bn.

Volume of insurance payments in the year 2004 totaled KZT6.7 bn. and increased in comparison with 2003 by 59.5%, including on compulsory insurance - by KZT1.5 bn. to KZT2.8 bn., voluntary personal insurance - by KZT0.3 bn. to KZT1.3 bn. and voluntary property insurance - by KZT0.7 bn. to KZT2.6 bn.

Besides, FSA has presented full information about its activity concerning Kazakhstan insurance market.

Regulation and supervision

In order to improve standards of insurance companies' activity, providing stimulus for corporate governance improvement and concentration of supervision resources in financial market's spheres, which are most of all prone to risks, and also in order to create stimulating conditions for development of accumulative insurance of life and annuities system, FSA included changes and additions in the project of Kazakhstan Law "About inclusion of changes and additions in some legislative acts of Kazakhstan concerning taxation", which was accepted on December 13 of 2004 #11-III.

This law provides decreasing of corporate income tax on annuity insurance from 2% to 1% from the amount of insurance premiums to be received (already received).

Besides, in order to increase interest of physical persons and their employers in accumulative insurance, including annuity insurance:

taxation of revenues meant for paying insurance premiums on accumulative insurance, is transferred to the moment of insurance payments receipt;

amounts of insurance premiums on accumulative insurance paid by employer for his clients are not employee's income;

amounts of insurance premiums paid by a physical person for himself on accumulative insurance agreements are to be deducted in full volume.

These changes took effect since January 1 of 2005.

FSA carried out the work on foundation of the state annuity company, result of which was the Resolution of Kazakhstan government dated December 24 of 2004 #1377.

Its major purpose is successful realization of obligatory insurance of employer's responsibility for harm of employee's life and health while carrying out his duties and provision of development of pension annuities system.

There was carried out the work on development of the project of the Law about inclusion of changes and additions i some legislative acts concerning insurance.

Major purpose of this project's development is harmonization of domestic insurance legislation in compliance wit the Directives of European Union and Principles of insurance supervision of International Association of Insurance Supervisions.

Successful realization of this project will let approach the level of domestic insurance industry to the world practice and will considerable simplify ways of market's coming to international schemes of insurance and re-insurance.

For monitoring of the financial market and financial organizations with the purpose of preservation of financial system's stability there was accepted the Program of Kazakhstan insurance market development for years 2004 - 2006 (resolution of Kazakhstan government #729 dated July 1 of 2004).

Major purpose of the Program is further reformation of the national insurance industry directed towards strengthening of the role and position of insurance as one of effective market instruments for controlling financial, economic, social and other risks of the state, citizens and managing subjects.

Major tasks of the Program are:

development of personal insurance, including its long-term and accumulative insurance types;

development of mutual insurance system;

increasing of population's insurance culture;

increasing of insurance informatization and automatization level;

development of state policy in the sphere of obligatory insurance and increasing of its effectiveness;

further improvement of insurance market's infrastructure;

preparation and improvement of specialists qualification in insurance sphere;

increasing of standards of insurance activity regulation and supervision;

improvement of re-insurance and co-insurance mechanisms.

In order to stimulate market's main indicators FSA has worked out three-year plan of stage-by-stage capitalization of insurance organizations. Besides, the purpose of this program is bringing of main indicators of insurance organizations' all-sufficiency in conformity with the world standards, that, in its turn, will promote to strengthening of their financial stability and growth of insurers' trust.

For precaution and prevention of illegal insurance activity in Kazakhstan, there was signed the order jointly with legislative bodies and there was accepted the plan of joint measures on its realization.

In order to improve procedures of accumulative insurance system regulation FSA worked out normative legal acts regulating the order of giving loans to insurers on accumulative insurance agreements and order of increasing of regular insurance payments sizes in the period of annuity agreements validity on the basis of actuarial conclusion. In 2004 FSA carried out the work on solution of problems concerning obligatory insurance of civil responsibility of Kazakhstan car owners entering the territory of Russian Federation. Result of this work was the Resolution of Russia's government dated December 21 of 2004 #823, sizes of insurance premiums on obligatory insurance of civil responsibility of transport owners for Kazakhstan car owners entering Russia's territory were reduced.

In 2004 there were accepted several normative legal acts meant for improvement of insurance payments guaranteeing system.

Within the frameworks of realization of the task on provision of completeness and availability of information for consumers about activity of financial organizations and financial services rendered by them, during 2004 FSA revised 205 appeals about insurance activity.

145 appeals about insurance legislation were concerned with the question about making insurance payments on obligatory insurance of car owners' civil legal responsibility (CLR), among which after interference of the authorized body 56 ones were regulated by the way of making insurance payments to insurers (victims) for a total of KZT9,676,637. Regarding 9 ones decision about payments of damages were taken.

On 60 appeals, according to legislation, there were given necessary explanations, due to which declarants removed their claims.

On revealed violations of the acting insurance legislation infringers were imposed administrative fines on in the year 2004 in the amount of KZT211,370.

As regards people's appeals about agreements of State insurance of KazSSR concerning the problem of absence of assignees on such the agreements concerned with fulfillment of obligations on the agreements there was prepared the letter for Kazakhstan Government, which joined several ministries and departments, besides FSA, to examination of this question. This work is to be continued.

Within the frameworks of the fulfilled work on harmonization of insurance legislation with Directives of EU and principles of insurance supervision МАСН there were prepared several proposals on inclusion of changes concerning creation of "insurance ombudsman" on Kazakhstan insurance market, in the legislation that will let minimize clients' expenses, quicken solution of disputable situations.

According to results of FSA's remote supervision for the activity of insurance market's activity regarding 30 insurance (re-insurance) organizations and 1 insurance broker there were taken limiting measures by sending 86 written prescriptions, regarding 2 insurance (re-insurance) organizations there were applied sanctions in way of using administrative fines (4 protocols of administrative violations of law), regarding 1 insurance organization there were applied sanctions in way of interruption of license.

Within 2004 there were made 6 complex inspections of insurance organizations' activity.

Information about realization of tasks on liquidation procedures

In 2004 FSA took measures on quickening of liquidation process of liquidated insurance organizations (hereinafter - companies) and provision of settlements with their creditors.

In accordance with expansion of FSA's authorities on fulfillment of controlling liquidation process of companies, during 2004 there were finished liquidation processes in 9 companies out of 16 ones, which were in liquidation process.

As the result of work carried out by FSA concerning optimization of liquidation commissions' expenses, there was established control for purposeful usage of companies' funds by liquidation commissions, and there were also decreased sizes of general liquidation expenses.

In order to protect creditors' interests there was appointed a temporary administration, and afterwards - liquidation commission of one insurance organization.

FSA took measures on bringing normative legal base in conformity with introduced changes and additions in legislative acts concerning companies liquidation.

[2005-01-26]