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ANALYSIS OF THE STATE OF THE INSURANCE MARKET AND ITS
DEVELOPMENT TRENDS
Khakberdiyev Bekzod Uktamovich
PhD., Head of the Faculty of Distance and 2nd Higher
Education of the Tashkent State University of Economics
ORCID: 0009-0003-4580-4520
https://doi.org/10.5281/zenodo.14564332
In the conditions of a market economy, the state has made every effort to
develop the insurance system, creates a legal framework that facilitates the
development of the insurance system, helps to find financial resources for the
establishment of insurance companies, and carries out work related to licensing
these companies.
An analysis of the literature devoted to the study of the problem of financial
stability of an insurance organization allows us to determine that the starting
point in determining the essence of financial stability is solvency - “the ability of
an insurance company to timely fulfill its monetary obligations, which are based
on law or contract”.
It should be noted that one of the main external factors affecting the
financial stability of insurance companies is the legal framework for regulating
this system in the country. It is precisely the excellent development of legal and
regulatory documents regulating the activities of the insurance market that
ensures the effective operation of companies based on the implementation of
strategic projects, making optimal decisions, and achieving financial stability.
The basis of any economy depends on its sustainable development. In this
case, the effective use of insurance institutions is of great importance. In this
regard, ensuring the stability of insurance companies is even more important.
One of the main factors ensuring the financial stability of an insurance company
is the insurance portfolio. Understanding the essence of the insurance portfolio
and ensuring its balanced form remains relevant today. The insurance portfolio
is the basis that determines the entire activity of an insurance company and its
financial stability. The insurance portfolio is understood as the actual number of
insured objects or existing insurance contracts in a certain territory. The
financial stability of the insurance portfolio is understood as a constant balance
between the risks assumed and the profitability of the portfolio. The size,
quality, composition and dynamics of the insurance portfolio determine the
profitability of insurance operations, the receipt of insurance payments,
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fluctuations in insurance coverage, and changes in the volume of insurance
amounts.
An analysis of the literature devoted to the study of the problem of financial
stability of an insurance organization allows us to determine that the starting
point in determining the essence of financial stability is solvency - "the ability of
an insurance company to timely fulfill its monetary obligations, which are based
on law or contract." Before discussing the analysis of the main indicators and
coefficients that assess the financial stability of insurance companies, it is
advisable to highlight the factors that affect it and their main aspects when
assessing financial stability. Factors that affect the financial stability of insurance
companies can be divided into external (uncontrollable) and internal
(controllable) factors in accordance with the general approach.
Table 1
Classification of types of financial stability of insurance companies [1]
№
Financial stability
classification
criteria
Types of financial stability of insurance
companies
1
By
level
of
financial stability
Absolute
Normal (normal)
Unstable (pre-crisis situation)
Crisis situation
2
By time period
analyzed
Short-term
Medium-term
Long-term
3
By entity assessing
financial stability
Internal (company employees, founders and
internal audit)
External (contractors of the company, financial
and credit organizations, financial intermediaries,
government bodies, rating agencies, external
audit, other physical and legal entities, etc.)
4
According to the
stage
of
development of the
company
Financial stability at the stage of entering the
insurance market
Financial stability in the growth phase
Financial stability in the development phase
Financial stability during a downturn
5
By stages of the Financial stability in conditions of maximum
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economic
development cycle
development
Financial stability in a downturn
Financial stability in times of crisis
It should be noted that one of the main external factors affecting the
financial stability of insurance companies is the legal basis of regulation of this
system in the country. It is precisely the perfectly developed legal and normative
documents of the regulation of the insurance market that ensures the efficient
operation of companies based on the implementation of strategic projects,
optimal decision-making, and the achievement of financial stability.
Each of the external and internal factors affecting the financial stability of
insurance companies has its own characteristics in terms of their impact on the
financial condition of the company. If we consider external factors, they do not
depend on the insurance company itself, therefore, taking into account the fact
that the company cannot change the impact of such factors, it should adjust its
financial activities in accordance with external factors. Internal factors, on the
other hand, depend on the financial activities of the insurance company,
therefore, the insurance company can ensure its financial stability by directly
influencing these factors. It should be emphasized that both external and
internal factors affecting financial stability have their own characteristics and
require a separate approach, but we will dwell on some of them.
Table 2
Financial indicators of the insurance market of Uzbekistan [2]
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Indicators
31.12.2022
31.12.2023
Change,
%
in
million
soums
in % of
total
in
million
soums
in % of
total
Total
2596 926
100%
2022 054
100%
-22,1%
Insurance organizations
in the general insurance
sector, including:
1 098 782 42%
1 568 461 78%
+42,7%
- compulsory insurance
232 813
9%
236 691
12%
+1,7%
- voluntary insurance
865 969
33%
1 331 770 66%
+53,8%
Insurance organizations
in the field of life
insurance, including:
1 498 144 58%
453 594
22%
-69,7%
- compulsory insurance
9 332
0%
12 658
1%
+35,6%
- voluntary insurance
1 488 812 57%
440 935
22%
-70,4%
The basis of any economy depends on its sustainable development. In this
case, the effective use of insurance institutions is of great importance. In this
regard, ensuring the stability of insurance companies is even more important.
One of the main factors ensuring the financial stability of an insurance company
is the insurance portfolio. Understanding the essence of the insurance portfolio
and ensuring its balanced form remains relevant today. The insurance portfolio
is the basis that determines the entire activity of an insurance company and its
financial stability. The insurance portfolio is understood as the actual number of
insured objects or existing insurance contracts in a certain territory. The
financial stability of the insurance portfolio is understood as a constant balance
between the risks assumed and the profitability of the portfolio. The size,
quality, composition and dynamics of the insurance portfolio determine the
profitability of insurance operations, the receipt of insurance payments,
fluctuations in insurance coverage, and changes in the volume of insurance
amounts.
The solvency of insurance companies is understood as the ability to fully and
timely fulfill monetary obligations to the insured in accordance with the terms
agreed upon in the contract or legislative documents. The solvency of insurance
companies is determined based on the characteristics of its sector and industry.
In addition, international financial reporting standards and international
practice also have specific characteristics of this indicator. In particular, in
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accordance with the procedure adopted in the countries of the European Union,
the solvency of insurance companies is assessed by comparing its current state
with a standard amount (norm) for solvency. In general, the level of solvency of
an insurance company should answer the question of what is the sufficiency of
private capital by the company to meet its obligations.
List of used literature:
1. Baratova, D., Khasanov, K., Musakhonzoda, I., Abdumuratov,S., & Uktamov, K.
(2021). The impact of the coronavirus pandemic on the insurance market of
Uzbekistan and ways to develop funded life insurance. InE3S Web of
Conferences (Vol. 296, p. 06028). EDP Sciences.
2. Prepared by the author based on information from the official website of the
Ministry of Economy and Finance - https://www.imv.uz/
