Iskakova Z.D., D.E., professor,
Aubakirova
G.T., C.F., the senior lecturer,
Umirbekova B.A., Karaganda Economic
University of Kazpotrebsoyuz
The main tendencies
globalization processes in insurance.
The
idea of society globalization and especially of economics is often conducted in
philosophical, economic, political and social researches. Globalization is a
qualitatively certain stage of correlation strengthening expansion tendency and
interdependence of countries from each other. How wasn’t this process
inconsistent, how the positive and negative parties weren’t intertwined in it,
it is necessary to admit, that it expresses the progress of a human society,
movement from its one stage to another.
Kazakhstan
Republic insurance market has more than ten years history of development: from
its full isolation from an external world during becoming the young and
independent national insurance market up to its modern condition and is described
by such qualitative changes which allow speaking about integration processes in
world system. The problem of purposeful and constant globalization processes
studying, including the insurance market, is urgent withing
the limits of such strategy.
The
last decade processes of the international economic globalization
interrelations which mean internationalization of economic, market merging,
capital concentration, creation of general conditions and legislative base for
activity, etc., have led to unprecedented earlier scales of the financial
globalization directly influencing the insurance sector too.
Today
insurance is one of the major tools providing the general economic safety and
stability, development of business, effective protection against numerous
natural, technologic and other risks, realization of social policy.
Nowadays
the research of the insurance market development directions in economic
globalization and social processes condition is actual.
Integration
of the national insurance market into world economic, promotes, or one hand.
Increase of the insurance market capital intensity and insurance, organizations
financial solvency strengthening, on the other hand. There are dangers and
risks about which the state and national insurers worries. Therefore the
reasonable state policy considering interests of the national insurance market
is necessary in these conditions.
According
to the aforesaid, the purpose of our scientific work is illumination of all
parts of globalization processes in the insurance market of Kazakhstan
Republic.
Insurance
is on of the most ancient categories of public relations. It appeared in the
decomposition of a primitive communal system it gradually became the
indispensable satellite of social production.
The initial sense of considered concept is connected with a word «fear».
Property owners, related among themselves in relation of production, felt fear
for its safety, for an opportunity of destruction or loss in connection with
natural calamity, fires, robberies and other unforeseen dangers of an economic
life.
Insurance
is an economic strategic sector.
Insurance
importance realization (along side with other financial services) in natural
manufacture and international trade has predetermined that, since January, 1st,
1995 the agreement on services, trade regulation was included as integral and
component into documents package about creation of the world trade
organization. In 1997 within the limits of WTO the agreement on liberalization
of the financial services market, which participants became 102 states, has
been signed. This world market covers 38 billion dollars bank credits, 18
billion dollars securities and 2 billion dollars insurance premiums.
The
basis of integration in insurance sphere becomes, on the one hand, development
of regional economic integration processes, and on the other hand, the changes
which have occurred inside of the national economics. These processes
developing in separate regions of the world in the beginning, almost all
contents have captured last years, led to appearance of numerous regional and subregional economic trade groups, with the aim to develop
of the world economic independent centers.
The
Kazakhstan insurance market and its development depends on many reasons: social
and economic development of the country, solvency of insurants-clients,
condition of the insurance legislation, instruments and state regulation
effectiveness. Nowadays the insurance payments are:
1. On obligatory insurance – 5475558
thousand tenge;
2. On voluntary personal insurance –
3750956 thousand tenge;
3. On voluntary property insurance –
34381380.
In total the insurance payments on
01.12.07 accounts for 43607895 thousand tenge which is much more than the
previous year – 12868784 thousand tenge [2, p. 52]
The important influence is rendered
not only by internal, but also by external factors – the conditions of joining
into WTO, insurance market development of CIS
and the Western Europe countries.
Will
the future joining of Kazakhstan the WTO help or prevent the Kazakhstan
insurance market?
Hungary
is a country with no insurance
company, for example. It is reality that there is no strong insurer in the
country which is the result of WTO membership.
Accordingly,
the Kazakhstan Agency of Financial Supervision regulates a situation according
to the certain standards and focused on the European market, the result of it
is on one hand, the weak participants leave the insurance market and on the
other hand the inflow of foreign countries is observed and our domestic market
is quite ready for it. In particular, AFS requires the company capitalization,
presence of certain reserve funds, actives, and, our companies exceed AFS
requirements in this direction. In any case, the Hungarian syndrome does not
threaten us because there are a lot of strong players in our market and
«foreign intervention» will only promote increasing of attention to service
quality, insurance services and insurance products package offered to the
population and businessmen.
There
are a lot of questions to the state regulator about foreign insurers legal
status, application of specifications to them, etc. I think in order to solve
these questions the insurance companies should join together, i.e. to solve problems together, in consolidation. If we
choose the way of full liberalization we can receive quite a picture which we
observe today in insurance branch of many East Europe countries where the local
insurance companies have been completely superseded by strong competitors from
the Western Europe.
Nowadays
there no completely open insurance markets in the world, each state tries to
protect its internal insurance market using various restrictions. Access
conditions of foreign insurers on the national insurance markets differ
depending on interests of the state in preservation of the control over
national insurance system. Some countries at formally unobstructed mode of
access, practice using of national barriers at a
level of statutory acts that does practically impossible real occurrence
of foreign insurers on the national
insurance markets.
Different
modes of taxation are used for national and foreign insurers. At the same time
in a number of countries favorable condition for inflow of foreign capital to
the country is created as there are many advantages for foreign capital
admission on the national insurance market.
Conducting
the policy of foreign insurer’s admission to its national market, any state
pursues the following purposes. First, any country is eager to protect its
national interests – insurers and insurants interests. Second, foreign
investments attraction into insurance promote the market capitalization
increase.
However
these purposes are mutually exclusive to a certain extent as the desire to
increase foreign capital inflow always entails of favorable investment climate
creation, and the desire to protect the national insurers inevitably conducts
to various sort of restrictions.
We
approach to the problem of optimum politic definition in this area, we solve
the problem of restrictive and tacks of foreigners admission process to the
Kazakhstan insurance market.
The
domestic insurance companies ambiguously concern to a question of foreign
insurers admission to the republic insurance market. Some insurers think that
insurance company sale to foreigners will lead to insurance business
prosperity. According to other paint of view, foreigners arrival to the
long-term interests of the country.
The
population won’t lose from foreign insurers presence.
The
insurance services cost will increase only simultaneously with growth of their
quality. Arrival of the foreign companies both for the population, and for
business will turn back with the demand growth on volumes of covering and on
service assortment. Experts also mark, that competition increase will force the
companies tariffs reduction by those kinds of
insurance on which they are overestimated.
The
state will probably win in the short-term prospect.
Insurance will bring move taxes in
the budget, and also will cease to be the seductive
tool of leaving from taxes for other branches. Development of insurance brave
kinds world allow the budget to help the victims of various natural and technogenic accidents. But there is a risk to lose the
certain volume of portfolio investments in economics in the long-term
perspective. «Long-money», reserves of insurers on life insurance can leave the
country. The higher requirements for management and employers training will be
presented with the arrival of foreigners. On the other hand, they will receive
more effective technologies and the best motivation. Therefore the prospect to
work in the foreign company involves them.
Taking into consideration the positive parts of the
process it is important to note that. There are fore risks for Kazakhstan
insurance market, for instance, light level of competition and domestic
insurer’s business activity suppression.
Today’s
shareholders of insurance companies have serious bases to be anxious about
expansion of foreign insurance capital. The supervises of national insurance
companies have different opinions about insurance market liberalization.
Some
of them think, that it is too early to
liberalize because the market is not ready and national insurers will suffer
from the future competition. In opinion of other insurers, the further
liberalization of the insurance market is necessary and the strongest and the
most successful should work in the market because of hard competition. There is
one more, the third point of view that there wont be large-scale expansion in
the near future as there is no favorable investment climate, in the Kazakhstan
Republic market and even long-term accumulation insurance cannot be a source of
super profit due to a low level of solvent demand. A number of exports speak
about a low standard of the population well-being and high income absence in
manufacture conducts to a low level of solvent demand. Another expert’s think,
that low rate of insured people creates potentially broad quantity of
insurants. Therefore, national insurers should collide with foreign competitors
within the limits of the limited insurance field, who can entice the clients by
the high level of service. The Kazakhstan insurance companies, even large ones
often do not consider interests of insurants, are not guided by their real
needs. Domestic insurants have little means and because of means lack and
insurance rules inflexibility, insurance company cant offer insurance service.
Besides many insurants are not satisfied with service level and long payment
process. In this connection, foreign insurers have a chance to win on lacks of
domestic insurer’s service quality.
In
our opinion, the sector of long-term accumulation life insurance of physical
persons which is the intensive capital branch demanding significant
investments, will suffer from foreigners arrival first of all. Overall domestic
insurance market (especially the market of individuals insurance) is still in
an initial stage of development.
The
important condition of the national insurance market integration in the world
community is creation of a favorable investment climate in the country.
Leading
western corporations wish openness, a transparency and certain guarantees of
their rights observance, remember about precedents of the past. The favorable investment
climate, predictability, guarantees from the state is necessary, which meet in
the majority of other states.
The
balance of measures on protection against a direct competition of foreign
insurers and measures on prevention of outflow of national insurance branch
recourses abroad is necessary. It is reached by restrictions of foreign
insurer’s direct access at more rigid state control over their economic
activities, including reinsurance abroad.
The
government ought to create a mechanism of control over sanction delivery to
foreign insurers and also to create a system of high-grade statistical data
about foreigners work.
Creation
of legislative base for realization of reinsurance activity of foreign
reinsurance companies and their representatives in the territory of Kazakhstan
world allow to supervise the foreign insurers activity more effectively.
It
is necessary for our insurance organizations to use as traditional enough kinds
of insurance services (cargoes insurance, transport, CLR (civil legal
responsibility), tourists, etc), and creation of the new complex services
comprehensively considering insurants inquirers in order to output on foreign
markets. Insurance products should be focused on needs and creation of insurant
choice in order to be on sale.
Thus,
if is possible to ascertain, that global tendencies consequence in insurance
should become:
-
Insurance
premiums decrease in rates;
-
The
whole spectrum occurrence of insurance services, including and due to mutual
penetration and merging of the general financial system separate parts in the
form of partial integration;
-
More
severe constraints to the insurance companies beginning the activity or getting
on the new market;
-
More
favorable conditions for insurants of a contract conclusion condition on
insurance services rendering.
Overall the insurance
business development of last years shows, that the winners of the competition
can be only those companies which offer detailed risk analysis and target
investment projects to their clients. In case of price stability the need of
quality insurance services will increase and it will lead inevitably to greater
demand for experts services in the sphere of actuary calculations, analysis,
control and especially individual and corporate
clients risk management.
Without hesitation the
large insurance companies will possess more strategic freedom, than small and
average competitors, due to their optimum size and financial force. Large
insurers, possessing the big economic force and financial power, will be able
to serve corporate clients on behalf of multinational corporations, to give
them a wide spectrum of insurance services.
The small and average
insurance companies to survive in these conditions, should raise the
competitiveness, strengthening concentration on the certain market segments
depending on economics branches and risk types. The most perspective direction
of their activity is national service business formation in the home market,
offering risk management, working off the client’s strategy and requirements;
expert reputation gain; corresponding marketing policy creation.
In condition of
insurance markets integration it is necessary to solve the problems of
supervision institutes adaptation and control over insurance activity having
expanded their competence. In particular, nowadays the power of supervision
bodies is extending in some countries and covers some branches of financial
sector (insurance and bank). The Association of international insurance
supervision has been created, which provides the information market
transparency as concerning supervision problems and insurance activity control,
but also the national insurers functioning, standard requirements unification
on their financial stability, to consolidate the balance, as a necessary condition
for favorable investment climate creation.
Realization of these
problems will allow providing consumers right protection and promoting
integration of the separate countries insurance markets.
Unlimited opportunities
of the information space which changed the occurring economic processes last
decades, have led to independence of financial sector from state control and
regulation. Intensive growth of a world financial system as sets of the
financial markets (currency, share, credit and insurance), many traditionally
internal spheres of state regulation are internationalized such as taxation,
social policy, labor legislation and etc. All this leads to necessary to format
a new global processes regulation mechanism in insurance.
List of literature
1. Adamchuk
N.G. «World insurance market on the way of globalization» / Russian political encyclopedia/
2004 – p 591.
2. Insurance market. Data of
insurance market condition. January, 2008.
3. Koshanov
A.K. «Globalization and system of regional economic interests.» /Problems of
steady economic development in the period of globalization. Almaty,
2003 – p 400
4. Sembekov
A.K. Theory and priorities of steady insurance market development in the
Republic of Kazakhstan. /Long-term prognoses of Kazakhstan insurance market
development in the period of globalization. Karaganda, 2005 – p 235
5. Turbina
K.E. «World insurance market development tendencies.» Moscow, 2000 – p 52
6. Berg T.K. «Insurance market:
organization and regulation.» Minsk, 2002 – p 113
7. Pleshkov
A.P. «Foreign insurance experience» Moscow, 2007 – p 36