What is the reason for the growth of the insurance market in Uzbekistan this year?

The market can be divided into voluntary and compulsory classes of general insurance, and life insurance. The division in 2021 between voluntary and compulsory types of general insurance, and life insurance was approximately 70% / 12% / 8%, respectively. Over the past 3 years, the share of life insurance has dropped sharply from 26% in 2019, 14% in 2020 and 8% in 2021.

In 2021, the collection of life insurance premiums reached the 2019 level of 0.47 trillion soum (44 million US dollars). In accordance with the Decree of the President of the Republic of Uzbekistan No. PP-5265, the announced tax benefits in the life insurance industry, both in terms of the income tax of the insurance company and in terms of income tax, will accelerate the development of long-term life insurance and will be aimed at expanding the list of services.

Mandatory classes consist mainly of employer liability insurance and compulsory motor third party liability insurance. Employer liability insurance grew in 2020 and 2021 by 30% / 27%, respectively, and MTPL increased by 9.5% / 13%, respectively. Due to active development, even during a pandemic,  the size of compulsory CAR/EAR insurance premiums increased by 72%.

An increase of 66% is observed in voluntary classes of insurance, in total terms of 734 billion soums (68 million US dollars). The volume of credit insurance has doubled, general liability insurance has grown sevenfold, and property insurance has reached pre-pandemic levels.

The market is under the influence of the program of economic liberalization, which has been carried out since the coming to power of President Sh.M. Mirziyoyev at the end of 2016.

The reforms, announced in August 2019, are aimed at strengthening the role of the sector in the economy and developing a new comprehensive regulatory framework. They also include measures to support premium growth, especially in retail segments, and provide support or guarantee mechanisms in areas of strategic importance to the economy. The Uzbek government expects the insurance sector’s contribution to GDP to grow to 0.8% by 2022 from 0.4% in 2018, and aggregate insurance premiums to rise to $ 478 million from $ 203 million, respectively, as a result of reforms.

In 2019, a new Agency for the Development of the Insurance Market was created, replacing the previously existing Office of the State Inspection of Insurance Supervision.

In a separate project “On measures to create the infrastructure of Islamic banking and financial management in the Republic of Uzbekistan”, announced in 2018 also under the auspices of Presidential Decree No. UP-4947, a commission was formed to work on the development and submission for approval of legal norms, Islamic banking and financial infrastructure, including in relation to insurance or Takaful activities. This is likely to lead to the development of takaful products in the Uzbek insurance market.

The use of brokers is increasing and there were five firms registered in mid-2020. Foreign brokers are showing a growing interest in opening their presence in the country. Several retail products are now starting to spread over the Internet, including MTPL, comprehensive insurance, home, travel and health products. The COVID-19 pandemic, which has resulted in travel restrictions in Uzbekistan and the temporary shift to telecommuting, has spurred a trend to buy retail insurance products online.

The opening of new insurance companies in the general insurance industry (5 insurance organizations, including 1 with 100% foreign capital – Azimuth Insurance Company) also influenced the growth of insurance premiums.

In connection with the attraction of large foreign investments, premiums on voluntary types of insurance for construction and installation risks, civil liability insurance and property increased sharply, the share of reinsurers in insurance reserves increased.