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RAEX predicts life insurance’s share to account for 30% of Uzbekistan’s market

Finance Materials 6 November 2019 16:28

BAKU, Azerbaijan, Nov. 6

By Fakhri Vakilov - Trend:

The share of life insurance in Uzbekistan will expand further in 2019 and account for around 30 percent of the market, Trend reports citing RAEX-Europe credit rating agency’s report.

RAEX also added that over the last two years, the life insurance segment has seen outsized rise driven by income tax incentives for the population. The growth rate of gross world product (GWPs) has been doubling annually; while in 2016 the share of the life sector encompassed only 10 percent of the entire market, in 2018 already it went up to 25 percent.

“Insurance claims have also shown high growth rates, having more than doubled in 2018, and the ratio of claims to GWP has grown to 63.2 percent,” according to RAEX.

As of nine months of 2019, the ratio of claims to gross world product (GWP) in Uzbekistan reached 90 percent, which is explained by the specifics of life insurance products in Uzbekistan, focused on returning a major part of the premiums back to customers in the form of monthly rents or at the end of the insurance agreement, usually after 13 months.

Thus, the real growth of the life insurance market is much inferior to the growth of premiums.

With the growing of the number of companies, concentration has decreased, but the TOP-3 companies still generated 70 percent of total GWPs as of 3Q2019, while the two new companies are just starting operations.

According to the results of 2018, the life insurance sector leaders in terms of volume of GWPs were New Life Insurance (38.3 percent share), Agros Hayot (31 percent share) and O'zbekinvest Hayot (24.2 percent share).

“The non-life sector also has been accelerating over the past few years, largely driven by GWPs in voluntary insurance products, which grew by 71.8 percent year-on-year in 2018, thus expanding its share in the total amount of GWPs to 78.4 percent,” the agency reported.

Compulsory insurance GWPs increased in a more moderate fashion, by 13 percent in 2018, mainly due to the insurance of civil liability of employers and vehicle owners. In contrast to the premiums, volumes of claims increased by only 27 percent in 2018, with the ratio of claims to GWP at 16,2 percent.

Concentration in the non-life insurance sector is much lower, the Top-3 and Top-5 companies accounted for 41.2 percent and 57.5 percent of all premiums in 2018 respectively.

The obvious leaders of the life insurance sector are Uzagrosugurt (share of 14.6 percent), Uzbekinvest (share of 13.9 percent) and Gross Insurance (share of 12.6 percent).

RAEX expects further gradual development of the non-life insurance market due to the expansion of the product range and introduction of online policies. In the compulsory insurance segment, the compulsory Motor Third Party Liability (MTPL) coverage has already reached 90 percent of the market. Going forward, RAEX expects this segment to grow at a slower pace.

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