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Largest share of GWP in Uzbekistan belongs to voluntary non-life insurance products

Finance Materials 6 November 2019 15:15

BAKU, Azerbaijan, Nov. 6

By Fakhri Vakilov-Trend:

Uzbek's insurance sector is the most dynamic in terms of development, and since 2016, the annual average growth rate was 45.3 percent, Trend reports citing RAEX-Europe credit rating agency’s report.

The market is represented by compulsory civil liability and voluntary types of insurance, as well as life insurance. The highest share belongs to voluntary non-life insurance products accounting for 58.3 percent of total gross world product (GWP), followed by life insurance with 25.6 percent, read the message.

Compulsory products represent 16.1 percent of the market. Gross claims have also been in an upward trend by 65 percent on average during 2016-2018 led mostly by the life segment, while the non-life claims leveled out in 2018 after an upsurge in 2017.

The growth in the number of players in the Uzbek insurance market has intensified over the past two years. Whereas in 2017 there were 27 companies in the market, in the second half of 2019, their number increased to 33. The life insurance sector is developing most actively, and four new companies have emerged in the past two years; as a result, the ratio of life to non-life insurance players has reached 8:25, read the message.

Market concentration slightly decreased with the top-5 companies share of the market standing at 48.3 percent and the top-10 at 78.4 percent in terms of GWP as of end-2018.

Due to considerable growth of premiums and capital, in 2018 the insurers' investments increased by 35.6 percent. However, given the weak functioning of the capital market, which is limited by state regulation and still has a narrow range of financial instruments, Uzbek insurers' investment portfolios are conservative and dominated by bank deposits, the share of which grew from 45.2 percent in 2017 to 51.8 percent in 2018.

According to RAEX, the second place, with a share of 35.2 percent, is occupied by investments in securities, followed by investments in the capital of enterprises and real estate with shares of 6.2 percent and 6 percent respectively.

In 2018, insurers' total equity increased by almost a quarter due to significant additional shareholder’s capitalization.

As a result, the charter capital was build-up by 69 percent in 2018. The total volume of insurance reserves also grew by 45 percent compared to 2017. To accelerate the development of the insurance industry, the government has introduced a series of reforms, including a gradual increase of the minimum size of the charter capital depending on the types of insurance activity and increase of the size of the reserve fund.

The minimum size of the authorized capital should be increased gradually till 2022 up to $2.1 million for companies operating in the area of voluntary insurance products, and up to $3.6 million for companies in the area of compulsory insurance products, read the message.

Besides, RAEX reported, it is planned to implement electronic policies in Uzbekistan, developing a mechanism of mandatory medical insurance and introduce international standards of capital adequacy and solvency of insurers.

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