The Law of the Republic of Kazakhstan of 5 July 2006 No. 163 regulates the creation and operation of mutual insurance societies, the rights and obligations of their members, the formation of insurance funds and the procedure for mutual protection of shared property interests.
What mutual insurance is
Mutual insurance is a form of protection in which participants with homogeneous risks join together in a society and insure each other's property interests. Unlike the ordinary commercial model, the members of the society are at the same time participants in the system and the persons in whose interests the insurance fund is created.
The main principles established by the law are equality of the members' rights and obligations, mutual protection and mutual liability. The objects may be the lawful property interests of the society's members, united by identical or similar risks connected with their activities.
How a mutual insurance society differs from an insurance company
| Criterion | Mutual insurance society | Commercial insurer |
|---|---|---|
| Participants | Members of the society with shared risks | Client policyholders |
| Purpose | Mutual protection of the members' interests | Providing insurance services on the market |
| Governance | Members participate through the society's bodies | Bodies of the insurance organization and shareholders |
| Financing | Contributions and other sources provided for | Insurance premiums and the company's capital |
| Range of insured persons | Usually the members of the society | Clients within the licence and the rules |
These models cannot be considered fully interchangeable. The procedure for admission to the activity, the classes of insurance, the financial requirements and the possibility of insuring non-members are determined by the legislation in force.
How a society is created
A mutual insurance society is created in the organizational and legal form provided by law. The founders approve the charter, the mutual insurance rules, the management structure and the procedure for forming property. State registration of the legal entity does not in itself replace obtaining permits or meeting regulatory requirements, where they are necessary for the chosen activity.
Before creating the society, participants are advised to determine:
- which homogeneous risks are being pooled;
- who can become a member and on what terms;
- how insurance and additional contributions are calculated;
- what the sums insured, limits and exclusions are;
- how reserves are formed and a funding shortfall is covered;
- which bodies manage the society and who supervises their work;
- how a participant joins the society and terminates membership.
Rights of the society's members
The specific rights are determined by the law and the charter. As a rule, a member of the society has the right to take part in management, receive information on the activities and financial condition, enjoy insurance protection on the established terms, review the rules and demand performance of obligations.
Equality of members does not mean that the amount of each contribution and payout is necessarily the same. They may depend on the characteristics of the risk, the sum insured, the loss history and other objective factors set out in the rules.
Obligations and mutual liability
Members are obliged to pay contributions on time, provide accurate information about the risk, comply with the charter and the rules, give notice of material changes and take measures to prevent losses. If funds are insufficient to meet obligations, the law and the society's documents may provide for additional financing mechanisms.
Therefore, participation in mutual insurance requires assessing not only the expected savings but also possible liability. Before joining, it is necessary to find out whether additional contributions may arise, how their amount is determined and in which cases a member is liable for the obligations.
Governing bodies
General meeting
Considers key matters, approves documents and takes decisions within its competence.
Executive body
Organizes day-to-day operations, the conclusion of contracts and the implementation of decisions.
Supervision
Ensures review of finances, reserves, compliance with the rules and risk management.
The composition of the bodies, the voting procedure, the quorum and competence must be clearly set out in the charter. This is especially important in the event of a conflict of interest, a large loss or a decision on additional contributions.
Mutual insurance rules
The mutual insurance rules describe the subject of protection, insured events, exclusions, the procedure for calculating payments, notification deadlines, the list of documents and the payout procedure. They must be available to a member before joining and concluding the contract.
Particular attention should be paid to:
- the moment insurance protection begins and ends;
- the territory and period of validity;
- the deductible and liability limits;
- the grounds for refusal and reduction of a payout;
- the procedure for assessing damage and engaging experts;
- the deadlines for submitting a claim and taking a decision;
- the terms of reinsurance of large risks;
- pre-trial and court resolution of disputes.
Financial stability
A society's ability to meet its obligations depends on the adequacy of contributions, reserves, asset management and reinsurance protection. A low initial payment does not always mean a benefit: if risks are underestimated, participants may be required to restore financial stability through the mechanisms provided.
Before joining, it is useful to request financial statements, the history of losses and payouts, information on reserves, the audit, reinsurance and any regulator measures in force. The decision should take into account the maximum possible loss, not only average statistics.
State regulation
The authorized body is the state body that regulates, controls and supervises the financial market and financial organizations. In 2026 these functions are performed by the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market.
The requirements depend on the nature of the operations, the sector and the class of insurance. Combining sectors and classes in mutual insurance is carried out in accordance with the legislation on insurance and insurance activity. Before launching a project, an official legal and regulatory assessment must be obtained.
Who mutual insurance may suit
- professional associations with similar liability;
- enterprises in the same sector with similar property risks;
- participants prepared to manage losses and prevention jointly;
- groups with sufficient statistics and financial discipline;
- organizations for which standard commercial cover is limited or too expensive.
The model is less convenient if participants' risks differ greatly, there is no transparent governance, there are no actuarial calculations or the members are not ready for long-term mutual liability.
Checks before joining
- Study the charter and the insurance rules.
- Check the registration and regulatory status.
- Assess the contributions, reserves and additional obligations.
- Look at the history of payouts and large losses.
- Clarify the procedure for withdrawal and return of property.
- Obtain an independent legal and actuarial assessment.
Current and archive versions of the law
Official control version: Law of the Republic of Kazakhstan "On Mutual Insurance" in the Adilet legal information system.
The attached file from the original publication is kept for historical purposes. It may not include the 2025-2026 amendments:
Download the archive DOC: zakon-o-vzaimnom-strahovanii.doc [82 Kb] (downloads: 143)
Conclusion
A mutual insurance society allows participants with shared risks to organize collective protection, but it requires transparent governance, sufficient funding and a readiness to bear mutual obligations. Before creating or joining one, it is important to check the current version of the law, the financial model and the regulatory requirements.
This material is for information purposes only and is not a legal opinion. Apply the official control version of the legislation as of the date of the decision.