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THE ROLE OF THE INSURANCE MARKET IN THE DEVELOPMENT
OF GREEN TYPES OF INSURANCE: SCIENTIFIC-THEORETICAL
AND PRACTICAL APPROACH
Erkaboyev Yorbek Boirbekovich
Senior Lecturer of the Tashkent State University of Economics
e-mail: yorbekerkaboyev@gmail.com
Annotation
. The article analyzes the scientific and theoretical foundations of
types of green insurance within the green economy, international practice, as well as
the possibilities of implementing and developing these types of services in the context
of Uzbekistan. It also puts forward existing problems and practical proposals for their
elimination.
Key words:
green economy, green insurance, environmental risk, insurance
market, sustainable development.
Introduction.
In order to ensure sustainable development and environmental
safety in Uzbekistan, the transition to a green economy has become one of the priority
areas. The role of the insurance sector in this process is increasingly increasing,
especially the importance of types of "green insurance" that provide protection against
environmental risks. One of the main areas of sustainable development of the modern
economy is to ensure environmental safety and rational use of natural resources. In this
process, the importance of the insurance sector, in particular, types of green insurance,
is increasing. Green insurance is not only a means of financially eliminating
environmental risks, but also an important mechanism for stabilizing the country's
economy.
On March 1, 2024, Resolution No. PQ-108 "On comprehensive measures for the
further development of the insurance services market" was adopted, which for the first
time in official government documents reflected the provision on "green insurance" as
an object of scientifically based policy. Instructions were also given to introduce "green
insurance" products[1].
The resolution mentions the term "green insurance" not only as a practical tool,
but also as an important institution in ensuring economic stability. This allows us to
consider these types of insurance as an object of scientific research.
First, we should dwell on the concept of green insurance and its types. Green
insurance includes insurance services that protect against environmental risks, natural
disasters, pollution, and renewable energy projects. These types of insurance serve to
protect the country's ecosystem and encourage businesses to be environmentally
responsible.Yashil sug‘urtaning asosiy turlari quyidagilar:
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Natural disaster insurance is a type of insurance aimed at eliminating economic
losses resulting from natural or man-made factors such as floods, droughts, fires,
earthquakes, winds and landslides. This type of insurance is a means of ensuring
financial stability for residents and entrepreneurs living in areas prone to natural
disasters. In Uzbekistan, there are areas prone to natural disasters, with a high risk of
drought in agricultural lands, floods and landslides in mountainous and foothill areas,
as well as drought and heat stress in the Republic of Karakalpakstan and Surkhandarya
region, as well as fire and wind risks in construction and urban development, and we
understand the need for green insurance.
Renewable energy projects (RES) are projects to produce electricity or heat using
solar, wind, hydropower, biomass, and geothermal sources. These projects are capital-
intensive, but also involve high risk. Due to their high dependence on weather factors
(for example, solar panels are ineffective on rainy days), technical failures,
construction delays, or licensing issues, as well as legal and environmental risks,
insuring these projects is a guarantee tool for investors, banks, and the state.
Renewable energy project insurance is a strategic mechanism in the transition to
a green economy in Uzbekistan. This type of insurance helps reduce investment risks,
increase project efficiency, and ensure the environmental sustainability of the country.
Environmental liability insurance is a type of insurance for legal entities or
individuals for damage to the environment caused by their activities. Environmental
liability insurance is one of the types of “green insurance” that is widely used in
international practice and is very relevant for Uzbekistan.
This type of insurance provides financial protection for enterprises and
organizations from environmental risks, insures payments and reimbursement of
expenses in cases of environmental pollution, and strengthens social responsibility to
the state and society. Environmental liability insurance - along with environmental
protection, serves to form a socially responsible business environment. The
development of this type of insurance in Uzbekistan is considered an important
mechanism for protecting the interests of the state, entrepreneurs and society.[3]
Financial protection of eco-infrastructures is the basis of the concept of "green
insurance". This direction is aimed at protecting objects, projects and infrastructures
aimed at protecting the environment from risks. Eco-infrastructure is infrastructure
objects built and operated for the purposes of environmental protection and sustainable
development. These include sewage and treatment facilities (biological and chemical),
city parks, green areas, eco-transport systems (electric buses, bike paths), as well as
energy-efficient buildings, and environmental monitoring centers.
Financial protection of eco-infrastructures is an important mechanism not only for
protecting investments, but also for ensuring environmental sustainability, public
health and economic security. The insurance system can serve as a reliable guarantee
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in this area.
Agricultural insurance (especially against climate risks) is one of the most
important and necessary areas of "green insurance" for the agricultural sector. This type
of insurance allows reducing agricultural risks and guaranteeing farmers' income. This
type of insurance covers the risks of crop loss (floods, droughts, rains, winds), damage
to crops or animals, as well as loss of income due to natural disasters and weather
conditions.
Literature review.
In recent years, the number of scientific and practical studies
on the development of types of green insurance has been growing. There are many
foreign and domestic scientists who have conducted research in the field of green
insurance and environmental risk insurance. In particular, Natalia Vladimirovna
Pershina published works in the field of the insurance market and environmental risk
assessment "Environmental Insurance: Theory and Practice" (monograph), in which
she analyzed the legal, economic and practical aspects of the implementation of
environmental insurance mechanisms in Russia. In parallel, Olga Nikolaevna
Smirnova studied insurance instruments linking ecology and finance. Uzbek
economists Sobirov Bakhtiyor Bakhromovich touched upon the issues of assessing
environmental risks and mechanisms for their insurance in their articles "The Role of
Environmental Insurance in the Development of a Green Economy", "Methods for
Assessing and Reducing Environmental Risks in the Insurance Market". The issues of
green insurance and environmental risk insurance, its theoretical and practical aspects
were considered by the foreign scientist Christian Gollier (France) in his work
"Assessing the Future of the Planet", which is based on scientific approaches in the
field of environmental risk, climate change, green economy and insurance. Howard
Kunreuther (USA) in his work "Managing Catastrophic Risks through Insurance"
conducted research on natural disasters, climate risks and insurance. At the same time,
domestic researchers A.R. Mamarakhimov in his articles "Green Economy and
Financial Mechanisms", Sh.E. Rakhmatov in his articles "Sustainable Economic
Development and Reforms in the Insurance System" put forward priority areas for
expanding the possibilities of green insurance and environmental risk insurance.
Methodology.
In the process of conducting the research, the methods of system
analysis and approach, logical and structural analysis, grouping and generalization,
expert assessment and forecasting, mutual and comparative comparison were used.
Analysis and results.
Government decisions are being implemented to further
develop the insurance market, improve the availability and quality of insurance
services through the widespread introduction of modern information technologies, and
further improve regulation of the industry. As part of this study, a detailed analysis of
the introduction of types of "green insurance", development opportunities, existing
obstacles and ways to overcome them was conducted. The main areas of analysis and
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their results are presented below. During the analysis of the state of environmental risks
in the insurance market of Uzbekistan, it was revealed that special types of
environmental risk insurance are practically absent or operate in a limited volume.
Insurance companies mainly specialize in insuring traditional risks (automobile,
property, life, etc.). At the same time, the mechanism for assessing environmental risks
is insufficiently developed, and insurance companies lack the qualifications and
practice of analyzing environmental risks.
During the analysis of the state of environmental risks in the international
insurance market in developed countries (Europe, USA, Japan), types of green
insurance are actively being introduced. In particular, climate risk insurance, carbon
emissions insurance, and energy efficiency insurance are available and provided with
practical mechanisms. It has been determined that in Uzbekistan, in order to implement
these experiences, it is necessary to improve the regulatory framework and market
infrastructure. [4] According to the results of a survey involving about 30 insurance
companies in Uzbekistan, 78% of companies do not have information about green
insurance, and 85% of companies indicated that they would be ready to introduce this
type of insurance if there were incentive mechanisms (tax incentives, subsidies) from
the state. Using a scenario modeling method that combines financial analysis and
probabilistic efficiency, it is shown that the introduction of green insurance types will
lead to a reduction in economic losses by 12-18%, a reduction in government spending,
and the creation of new jobs and products in the insurance sector.
Conclusion
The results of the study of the development of green insurance types show that
global environmental threats, climate change, the growth of man-made accidents and
natural disasters require the restructuring of the insurance system through new
mechanisms. In particular, green insurance is becoming an important tool not only for
reducing economic risks, but also for protecting the environment, ensuring sustainable
development and increasing social responsibility.
The analysis carried out in the article shows that in international practice, green
insurance is implemented in several forms: environmental liability insurance,
insurance of renewable energy projects, insurance of coverage of agro-ecological risks,
insurance of "green certified" projects in construction and industry, etc. These types
form new segments of the modern insurance market.
The authors of the study propose the following main directions for the
development of green insurance types:
1. Improvement of the legislative framework - it is necessary to introduce separate
regulatory documents taking into account green finance and environmental risks.
2. Diversification of insurance products - creation of specialized types of
environmental insurance in accordance with market demand, by sector.
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3. Financial incentives and subsidies - a mechanism for state stimulation of green
insurance activities.
4. Informing the population and businesses - strengthening environmental
responsibility by improving the insurance culture.
At the same time, the article notes that in developing countries such as Uzbekistan,
there are a number of obstacles to the implementation of green insurance, such as the
lack of infrastructure, database and personnel. Therefore, a step-by-step approach
adapted to local conditions is needed.
In conclusion, the development of green insurance is important not only for
environmental protection but also for sustainable and inclusive economic development.
Scientific analyses and practical proposals in this area provide a solid scientific basis
for the formation of national insurance policy and the strategy of the "green economy".
References:
1.
Resolution of the President of the Republic of Uzbekistan dated March 1, 2023 No.
PP-108 "On comprehensive measures for the further development of the insurance
services market". https://lex.uz/docs/6824178
2.
Resolution of the President of the Republic of Uzbekistan. (December 3, 2022).
"Green Energy Development Program for 2023-2025". No. PP-4365.
3.
Khaitmatov, M. (2021). Issues of development of environmental insurance in
Uzbekistan. Scientific electronic journal of economics and innovation
technologies, No. 6.
4.
Azimova, N.Sh. (2020). Methods of assessing environmental risks in insurance
activities. Scientific journal of the Tashkent Financial Institute, No. 2.
5.
Mamarasulova, G.A. (2022). Issues of development of insurance activities in the
context of a green economy. Finance of Uzbekistan, No. 4.
6.
Tokhtayev, H.H. (2021). Issues of green economy and integration of the insurance
system. Economy and education, No. 1 (84).
7.
Komilov, B.K. (2023). Sustainable financial instruments and green insurance
opportunities in Uzbekistan. Scientific works of the Academy of Finance, No. 3.
8.
Kholbaev A.Yu. Prospects for improving the practice of insurance of information
risks in Uzbekistan. I.F.F.D. Abstract of the dissertation for the degree of Doctor
of Economics. Tashkent, 2025.
9.
Azimov R.S. Improving the methodology of risk insurance in the context of
economic modernization. Abstract of the dissertation for the degree of Doctor of
Economics (DSc). - T .: - 2022. - 86 p.
10.
Baymuratov T.M. Improving the mechanism of insurance activity and its taxation
in Uzbekistan. Abstract of the dissertation for the degree of Doctor of Philosophy.
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http://www.napp.uz – Information from the official website of the National Agency
for Prospective Projects of the Republic of Uzbekistan.
