On the Insurance Payments Guarantee Fund
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What the Insurance Payments Guarantee Fund is
The Insurance Payments Guarantee Fund (IPGF) is an organization that ensures payments to policyholders, insured persons and beneficiaries when an insurance company cannot meet its obligations because of compulsory liquidation. In addition, in cases provided for by legislation, the fund compensates harm caused in a road traffic accident where the culprit has not been identified or their liability was not insured.
The Law of the Republic of Kazakhstan "On the Insurance Payments Guarantee Fund" defines the legal status of the fund, the procedure for insurance companies to participate in it, the sources from which its assets are formed, and the conditions and procedure for making guarantee payments.
Purpose of the law
The main task of the law is to protect the interests of citizens and other recipients of insurance payments and to maintain trust in the insurance market. Even if a client chooses an insurer carefully, they cannot fully rule out the risk that the company's licence will be revoked. The guarantee system reduces the consequences of such an event: for the types of insurance listed in the law, the recipient of a payment can apply to the fund for a guarantee payment.
Who the law affects
- Insurance companies — participation in the guarantee system is mandatory for insurers operating in the relevant types of insurance; they pay contributions to the fund and provide it with the necessary information.
- Policyholders, insured persons and beneficiaries — they are the ones who receive a guarantee payment when an insurer is liquidated.
- Road accident victims — in cases provided for by legislation on compulsory motor third-party liability insurance (MTPL).
- ARDFM — regulates and supervises the activities of the fund and of the insurance market as a whole.
When the fund makes payments
Compulsory liquidation of an insurance company
If an insurance company that participates in the guarantee system loses its licence and is liquidated compulsorily, the fund makes guarantee payments under contracts for the types of insurance expressly named in the law. As a rule, these are compulsory types of insurance and certain types of voluntary insurance that matter to citizens. The amount and procedure of payment are determined by the law and may be limited by set caps, so the compensation does not always equal the amount under the contract.
Harm caused by an unidentified or uninsured vehicle
If life, health or property was harmed in a road accident and the culprit fled or had no MTPL policy, legislation provides for compensation of the harm at the expense of the fund. After making the payment, the fund has the right to bring a claim against the person responsible for the harm caused. For more on motor insurance, see the car insurance section.
How the fund's resources are formed
- mandatory contributions from insurance companies that participate in the guarantee system;
- extraordinary contributions, if the funds are insufficient to make payments;
- income from investing the fund's assets;
- amounts received through recourse claims (regress) and funds received from the insurer's liquidation estate.
How to receive a guarantee payment
- Follow official announcements about the revocation of a licence and the liquidation of an insurance company.
- Check whether your contract belongs to the types of insurance for which guarantee payments are provided.
- Prepare the documents: the contract (policy), proof of premium payment, documents on the insured event, an identity document and bank details.
- Submit an application within the period established by law, following the procedure announced by the fund or the liquidation commission.
- In the case of a road accident with an unidentified or uninsured culprit, keep the police documents, medical records and damage assessment reports.
Common mistakes
- missing the deadline for submitting an application after the insurer's liquidation is announced;
- lacking a document that confirms payment of the insurance premium;
- expecting the fund to compensate losses under any type of insurance, including types not included in the guarantee system;
- assessing the damage independently without documentary evidence.
What matters in practice
The existence of a guarantee system does not remove the need to choose a reliable insurer. Before concluding a contract, it is useful to study the insurance companies of Kazakhstan, their licences and financial indicators. The file posted on the page reflects the text of the law as of the date of publication; the law has been amended many times, so check the list of guaranteed types, payment limits and deadlines against the current version in the "Adilet" legal information system (adilet.zan.kz).
Frequently asked questions
Does a policyholder have to pay into the fund separately?
No. Contributions to the fund are paid by insurance companies that participate in the guarantee system.
Can I receive a payment from the fund if the insurance company is simply delaying its review?
No. Delay in payment by an operating company is resolved through a claim, an appeal to the regulator or the courts. The fund steps in only in the cases established by law — above all, upon the compulsory liquidation of an insurer.
If your insurer has lost its licence or you need to check a company's reliability, you can get a consultation from a broker.