Making good progress in the development of the insurance market

In 2016, the Republic of Uzbekistan is marking by celebration a big jubilee - the 25th anniversary since the nation gained state independence in 1991. During this period impressive strides have been made in the country across all economic sectors and social spheres, including the insurance market.

It should be observed that over the years of its independent development, Uzbekistan has undergone lots of cardinal changes. Today, one can say with certainty that insurance is an integral part of the national economy. The most important achievements in this sector include: the formation of the insurance-market environment, the liquidation of the state’s monopoly in a given field and, as a consequence, a swift increase in the number of insurance organizations. The state plays the role of the insurance market’s major reformer. At the same time, stress is laid on the outstripping development of a legal framework, in a move to ensure the effective reformation of this sector. And the following legislative documents form a solid foundation on which to regulate and further develop the home insurance market: the Law of the Republic of Uzbekistan , “On insurance activity” as of 5th April 2002, the Presidential Decree, “On measures to further liberalize and develop the insurance market” as of 31st January 2001, the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan, “On measures to further develop the market for insurance services” as of 27th November 2002, etc. A package of all these measures to boost the expansion and reformation of the insurance market of Uzbekistan is aimed at strengthening the population’s confidence in insurance as such and insurance organizations, improving the quality of services they offer, as well as at raising their level of capitalization in an effort to reinforce their financial stability.

The insurance market has created a reliable and safe system of reservation and investment for free money funds, which can be transformed into the means of payment at the earliest possible date for customers to meet their liabilities.

Thus, thanks to these measures, in 2005 the Republic’s insurance organizations collected over 551 billion Soum (currency rates of CB RU from 12.10.2016, 1$= 3046.85  soums)in insurance premiums, 26 per cent above the 2014 level. As a whole, over the past 5 years the national insurance market has changed both qualitatively and quantitatively, demonstrating a 3-fold rate of growth.

A spectacular rise in the capacity of the home insurance market has been caused, first and foremost, by a stable growth of all macroeconomic indicators in the country and the efficient socio-economic policy, the fact accentuated by the Uzbek leader at the enlarged session of the government dedicated to the discussion of results of the nation’s socio-economic development in 2015 and priority directions of the 2016 Economic Program.

Special attention was devoted to steps to increase capitalization of indigenous insurance companies, which implies their transformation into powerful financial institutions and a significant source of investments for the real sector of the national economy. Last year, the aggregate amount of their chartered capital exceeded the 2014 similar indicator by 59 billion Soum. Let it be pointed out here that the infrastructure of the Uzbek insurance market these days is represented by 29 insurance companies, which, in turn, run more than 1,000 territorial sub-divisions countrywide.

As well as that, volumes of services provided by the domestic insurance companies are on the upward trend. In particular, in the last 4 years this indicator grew 3.4 times as much - from US $201.9 million to US $680.2 million. At the same time, such a graphic figure of increased activity in the sector of small business and private entrepreneurship as a volume of services provided to its participants swelled 7.5-fold over the past 5 years, with the sector’s share of insurance-service exports more than doubling.

In 2015, the total volume of insurance benefits across all types of insurance was in excess of 111 billion Soum, 1.5-fold above the 2004 level.                

(Source: «Business partner.uz» newspaper)