Kazakhstan Draft Law 'On the Insurance Market': Consolidating 11 Statutes, Transitioning to Solvency II, and Mandatory NatCat Housing Pool

The Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market (ARDFM) has concluded public consultations on the draft Law of the Republic of Kazakhstan 'On the Insurance Market' hosted on the Open Legal Acts portal. Commissioned pursuant to the Head of State's strategic mandate of February 10, 2026, the legislation represents an omnibus 'Insurance Code' designed to fully replace the legacy Law of the Republic of Kazakhstan 'On Insurance Activity' No. 126-II of December 18, 2000, which has governed the national marketplace for more than twenty-five years.

Regulatory Codification: 11 Statutes Synthesized into 255 Articles

The proposed statute transforms the structural architecture of the insurance system: comprising 13 sections, 39 chapters, and 255 articles, it unifies provisions previously scattered across 11 standalone enactments. The consolidation integrates the foundational insurance activities law, statutes governing the Insurance Policyholders Guarantee Fund (IPGF), mutual insurance legislation, and seven separate sectoral statutes regulating compulsory insurance lines—including Motor Third-Party Liability (MTPL) and Compulsory Workers' Compensation Insurance (CWCI).

This comprehensive harmonization eliminates longstanding regulatory arbitrage, terminology discrepancies, and statutory fragmentation, establishing a frictionless framework for digital interactions between insurers, supervisors, and policyholders.

Unified Compulsory Model and Dynamic Tariff Architecture

The legislative reform institutes a consolidated model for compulsory and statutory insurance lines, aligning the existing 8 mandatory classes and 10 imputed classes under common standards:

• Statutory Guarantees: baseline liability limits, loss trigger definitions, and essential policyholder protections remain codifed in primary law.
• Secondary Tariff Calibration: actuarial pricing formulas, regional scaling factors, and bonus-malus matrices are relocated to ARDFM secondary regulations. This operational shift empowers the financial regulator to recalibrate tariffs dynamically in response to medical/parts inflation, claims frequency shocks, and shifting severity patterns without requiring protracted legislative cycles.

National NatCat Pool and Compulsory Residential Property Protection

A foundational structural innovation is the statutory establishment of compulsory disaster insurance for residential housing against catastrophic natural perils—specifically earthquakes, catastrophic river floods, and wildfire events.

The architecture of the catastrophic insurance pool establishes:

• Differentiated Premium Scale: annual premiums for baseline residential protection range between 0.5 and 5 MRP per annum (2,163 to 21,625 tenge at 2026 benchmarks), calibrated according to municipal seismic risk and flood hazard zones (concentrated in high-vulnerability regions including Almaty, Zhambyl, and East Kazakhstan).
• Multi-Tiered Retention and Reinsurance: primary risks are pooled across licensed insurers into a national catastrophic reinsurance facility and retroceded into international capital markets.
• Phased Implementation: mandatory insurance coverage for all residential homeowners will be deployed under a transitional compliance runway extending through July 1, 2030.

Solvency II Transition, Mutual Phase-Out, and Unit-Linked Annuities

The legislation incorporates contemporary prudential solvency requirements alongside product innovation:

• Solvency II and IAIS Core Principles: the bill gives full statutory force to the Supervisory Review and Evaluation System (SRES) and economic risk-based capital standards aligned with the International Association of Insurance Supervisors (IAIS).
• Orderly Phase-Out of Mutual Societies: the bill prohibits the chartering of new Mutual Insurance Societies (MIS), mandating that all existing mutual carriers terminate or settle their underwriting contracts prior to January 1, 2028. This regulatory sunset responds to chronic solvency deficits and inadequate reserves across mutual societies that underwrote quasi-insurance risks without statutory capital backing.
• Unit-Linked Annuities and Foreign Branches: the life insurance market gains statutory authorization for investment-linked (unit-linked) and hybrid retirement annuities offering policyholder-directed investment choices paired with capital protection. Concurrently, statutory entry barriers are eased for branch operations of foreign insurance groups holding elite international credit ratings.

Submission of the finalized draft Law 'On the Insurance Market' and accompanying omnibus legislative amendments to the Parliament of the Republic of Kazakhstan (Kurultai) is slated before the close of 2026.

Actuarial conclusion: Consolidating 11 fragmented laws into a single code of 255 articles accelerates Kazakhstan's transition to Solvency II and IFRS 17 frameworks, eliminating historical regulatory arbitrage across mandatory lines (MTPL, workers' comp). For practicing actuaries, the preeminent technical challenge will center on pricing and rate graduation for the mandatory NatCat residential pool (0.5–5 MRP), demanding the synthesis of stochastic flood models with residential seismic fragility curves. Across life insurance, unit-linked and hybrid annuities will require dynamic stochastic modeling of investment guarantees and longevity risk, while the statutory dissolution of mutual societies by 2028 necessitates fair-value actuarial evaluation of run-off liabilities to support an orderly transfer into commercial balance sheets.