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PRIORITIES FOR DEVELOPMENT OF THE GENERAL
INSURANCE INDUSTRY IN UZBEKISTAN
Mavrulova Nilufar Abdukhalilovna
Associate Professor of the Tashkent Financial Institute
of the Republic of Uzbekistan, Doctor of Economic Sciences
email: mavrulovanilufar7@gmail.com
Annotation.
This article defines the priority areas for the development of the
general insurance sector in Uzbekistan, and identifies and analyzes the main factors
that impede the stable and effective functioning of the insurance system, in particular
the general insurance sector. It also describes the results that are expected to be
achieved in the field of general insurance through the implementation of these areas.
Keywords:
insurance market, general insurance sector, insurance premiums,
insurance payments, inflation, investments, GDP, material well-being.
Introduction
In the conditions of modern economic development, insurance protection of the
population and business entities is an integral feature of any civilized state.
At all stages
of the development of society, various risks have threatened human life and activity.
The possibilities of predicting and preventing accidents, unforeseen situations, natural
disasters, various natural disasters, as well as a decrease in income and the destruction
of property are limited. However, there are various methods and means of managing,
controlling and reducing the negative impact of these risks on humanity and its
financial situation, among which the insurance system is recognized as the most
appropriate mechanism. Insurance is an important part of the financial system, and
consistent reforms are being implemented to rapidly develop it, cover the population
with guaranteed insurance services, protect the legitimate interests of clients, and create
favorable conditions for the effective operation of insurance companies. As a result of
the measures taken by the government, the insurance market has been experiencing
steady growth in recent years.
Although the general insurance sector, which is a large sector of insurance, also
experienced a slight decline due to restrictions in recent years, the sector quickly
recovered and resumed growth. Although the growth trend in the general insurance
sector has been achieved, the national insurance market has many problems,
shortcomings, errors, and factors that hinder the development of the sector. The
purpose of the study is to focus on these aspects and identify priority areas for the
development of the general insurance sector.
Literature analysis ( Obzor literatur / Literature review) .
The directions of
d
e
v
e
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a number of foreign economists . Also, the theoretical and methodological foundations
of effective management of the insurance sector have been studied in the research of
scientists from the CIS countries: A. Alekseev, E. Alekseeva, V. Antsiferov, Yu.
Akhvlediani, N. Vnukova, A. Gvozdenko, I. Denisova, A. Mustafina, G. Nasyrova, N.
Tkachenko, A. Khutoryansky, G. Chernova, V. Shakhov.
Methodological bases of insurance activity, mechanisms of effective
management of the sector and directions of development scientists of our country :
Sh.Abdullaeva, N.Abdullaeva, I.Abdurakhmonov, G.Adilova, D.Baratova , N.Jumaev,
I.Kenjaev, N.Mavrulova, K.Nomozova, G.Nosirova, S.Umarov, N.Khaydarov,
G.Khalikulova, M.Khamroev, F.Khasanov, Kh.Shennaev, O.Yuldashev, It was
reflected in the scientific works of Q. Koldoshev, B. Hakberdiev.
The analysis of research carried out on the research topic showed that the concept
of general insurance development, which is considered an important direction of
insurance, has not been systematically studied. This situation determines the urgency
of developing proposals and recommendations aimed at eliminating the problems
investigated within the framework of the dissertation work.
Research methods.
The methods of systematic analysis and approach, logical
and structural analysis, grouping and generalization, expert assessment and
forecasting, econometric modeling, mutual and comparative comparison were used in
the research process.
Analysis and results.
The article first identifies and analyzes the factors hindering the stable operation
of the general insurance sector:
1. When analyzing the level of use of insurance services by the country's
population by region, it was found that the level of use of sector services by the
population of Tashkent city is high, that is, 61 percent of total insurance revenues fall
precisely on the capital region, while only 7.8 percent of the total population falls on
the capital[1]. The factors influencing this are: insufficiently formed insurance culture
among the population; ignorance of the importance and nature of insurance services;
distrust of the activities of sector organizations; perception of funds spent on insurance
as a waste of money; perception of prices as high; lack of understanding of the
beneficial aspects of insurance services; reluctance of insurance companies, especially
branches in the regions, to engage in retail and low-cost types of insurance.
2. The system of insurance of property and financial risks of small businesses and
private entrepreneurs (with the exception of commercial banks) almost does not work
due to the lack of development of marketing strategies aimed at increasing the
efficiency of insurance companies, slow performance, lack of full implementation, lack
of approaches to researching the demands and needs of business entities (except for
commercial banks), although this direction is promising and promotes economic
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growth in the country. encourages.
3. The continued implementation of a dumping policy in the pricing system for
insurance products is a serious obstacle to the financial condition of the organization,
solvency standards, and the positive resolution of insurance claims, which creates an
environment of unhealthy competition and distrust. The high level of application of
this policy in certain types of insurance, in particular, home and car insurance, leads to
the non-positive satisfaction of insurance claims. This factor itself creates a negative
perception of the industry in society.
4. As we noted above, the primary goal of insurers is not to provide quality and
guaranteed services, but to ensure high profits. In a system that operates quickly in
selling insurance policies and making profits, the fulfillment of insurance obligations
is taking a long time, the processes of determining the cause of insured events and
assessing damage, and paying insurance compensation have become bureaucratic, and
the claims management system is in need of improvement, which causes severe
dissatisfaction of customers with the company's activities.
5. Despite the reforms underway to accelerate the capitalization of the sector, the
capital potential of the country's insurance market remains low, which hinders
integration into global insurance markets, limits the possibilities of inbound
reinsurance, leads to an increase in outbound reinsurance, and ultimately affects the
income and profitability of insurers. According to the table, the described problems
and shortcomings did not affect the main indicators of the general insurance market.
Table 1
Analysis of key indicators of general insurance in Uzbekistan[2]
Indicators
2015
2016
2017
2018
2019
2020
2021
2022
General
insurance
premiums,
billion
soums
518.1
633.4
788.9
1217.9
1727.5
1879.3
3015.0
4707.0
General
insurance
payments, billion soms
89.2
95.9
191.7
196.9
284.2
419.6
618.7
1098.7
General
insurance
payout ratio, %
17.2
15.1
24.2
16.1
16.4
22.3
20.5
23.3
Number of general
insurance companies
28
27
23
24
28
32
34
33
Share
of
general
insurance premiums in
GDP, %
0.239
0.228
0.248
0.283
0.324
0.310
0.408
0.529
Ratio of total insurance
premiums
to
total
insurance premiums, %
94
91.4
85
74.5
75
85
81
76
Ratio
of
general
insurance
premiums
per capita, in soums
16785
18170
24160
36400
51100
54400
85500
130660
The table realistically reflects the state of the general insurance sector over the
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past eight years, based on data from official sources of the Insurance Market
Development and Statistics Agency. According to the table, the general insurance
sector, although not developing rapidly from year to year, has been showing a steady
growth trend. The increase in the number of insurance companies does not indicate
development, but the increase in the volume of general insurance premiums in the
country's GDP can give us a real assessment of this indicator. According to the table,
growth has been observed in this regard, albeit at a slow pace. The important task ahead
of us is to accelerate this trend and achieve economic stability and ensure continuous
growth.
The above situation requires solving the problems and deficiencies in the
insurance market with the help of systematic measures. Today, these activities are
required to be carried out based on the tasks defined in the relevant Roadmaps reflected
in the presidential decrees, below are recommendations for the development of the
sector:
1. Effective implementation of insurance operations begins with raising public
awareness of the sector. Relevant proposals have been developed in this regard, and
campaigns have been organized in the regions. Speeches in the media, debates, mobile
classes in the regions have been organized, advertising and promotional work has been
carried out using video clips, public appeals have been studied on the spot, and
unresolved insurance claims have been resolved positively and quickly. It is necessary
to further strengthen the implementation of such campaigns in places where the
population is most concentrated, as well as remotely, as influencing people's
consciousness through propaganda will be effective.
2. In order to create comprehensive convenience for potential policyholders and
minimize the operating costs of insurers, it is urgent to address the issues of quickly
introducing online service provision for all service processes, which will also prevent
fraud and deception in the industry.
3. In their activities, especially in the fulfillment of obligations, insurance
companies often fail to comply with the requirements of the Regulations and violate
control rules. In order to prevent this, it is necessary to develop a clear, systematic
mechanism for monitoring and taking measures, and introduce penalties and fines for
legal entities that neglect to fulfill their obligations. It is also necessary to consider
appeals for the satisfaction of claims of insured persons in a short time and protect
consumer rights.
4. As has been repeatedly noted, there is a need to establish a national company
specializing in reinsurance in the national insurance market, which has a large capital
potential and can participate as a partner in fulfilling the contractual obligations of local
insurers. In addition, organizations that carry out reinsurance in addition to their
activities are unable to insure large objects of great value due to their limited financial
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potential, which currently requires the release of obligations beyond their capabilities
to the world insurance market, as a result of which billions of soums of capital are
being released to the world insurance market. In order to reduce the negative
consequences of such a situation, the Resolution of the President of the Republic of
Uzbekistan No. PP-4412, adopted in 2019, established a restriction on the transfer of
excess liabilities to the global insurance market: “From October 1, 2019, a procedure
shall be introduced according to which, before transferring insurance liabilities to
foreign insurance organizations for reinsurance, the reinsurer shall be obliged to send
an offer for reinsurance (proposal to conclude reinsurance contracts) in the amount of
at least 50 percent of the insurance liabilities to be transferred to insurance
organizations that have the right to carry out reinsurance activities in the territory of
the Republic of Uzbekistan”[3]. The establishment of this restriction will lead to the
retention of capital in the national market, which will increase its capital potential.
The following results will be achieved in the field of general insurance through
the introduction of the directions defined above:
1. The creation of a stably functioning insurance system serves its most important
function, social protection of the population and business entities, and reduces the
state's cost burden.
2. As a result of quick and effective implementation of insurance operations, the
contribution of insurance income to GDP, the volume of insurance premiums per capita
will increase, and the investment opportunities of insurance companies will expand,
and the tasks defined in the state investment program will be fully fulfilled.
3. The coverage of existing types of compulsory insurance is ensured, ensuring
the continuity of production, economic growth, increasing the welfare of the
population, and ensuring the working capacity of the population. Compulsory
insurance is an accumulation of voluntary insurance, and potential clients who have
used insurance services once and felt its effectiveness have an increased need and
confidence in using voluntary insurance, which is why more and more companies
prefer to operate in the compulsory form of insurance and are engaged in compulsory
insurance, fulfilling the relevant requirements of the insurance supervisory authority
(formation of a minimum authorized capital, establishment of territorial branches).
4. The satisfaction of insurance service consumers with the industry is ensured,
the most important condition for which is the short-term and positive settlement of
insurance claims. Satisfying consumers and maintaining the continuity of cooperation
with them are also closely related to this factor: the most effective advertising in the
insurance industry is the positive settlement of claims.
5. There is an opportunity to accelerate the digitization of the general insurance
industry, like other digitized areas of finance, which is the demand of potential
customers who prefer to use insurance remotely, without leaving home, without
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excessive costs.
In general, joint action of professional participants of the insurance market is
required to ensure the competitiveness of the general insurance industry, increase its
potential, introduce service ecosystems, expand the coverage audience, and effectively
implement insurance relations.
Conclusion.
This article develops forecast options for changes in key indicators
characterizing the state of the general insurance market for the next five years, i.e.
2023-2027. The forecasting process uses the Winters method, one of the smoothing
methods, in combination with the additive method. [ 4 ], because in this case it is
possible to develop a forecast in the case of scenarios, where each indicator and the
overall result factor are implemented in three scenarios: pessimistic, medium and
optimistic. The article also developed forecast values of insurance premiums until 2027
based on determining the impact of financial results related to the general insurance
industry on the country's economic growth.
Table 2
Forecast values of the dynamics of changes in general insurance premiums
in the Republic of Uzbekistan in 2023-2027
Year
Pessimistic
Optimistic
Average
2023
0.96
1.45
1.30
2024
0.99
1.53
1.32
2025
1.02
1.58
1.43
2026
1.05
1.70
1.46
2027
1.09
1.74
1.49
By 2027, the index of the population's use of insurance services will increase, and
insurance premiums will increase in all sectors and directions, according to forecast
values, there will be an average increase of 49 percent compared to the previous year.
Figure 2. Comparative status of insurance premiums and forecast values
The prospects for the insurance sector have been determined by implementing the
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forecast for the growth of the general insurance sector for the next 2023-2027.
In
particular, the impact of changes in GDP and population income on insurance
premiums was modeled. According to it, insurance premiums in 2022 amounted to
4707.0 billion soums, and in current prices this value was forecast to amount to
33278.43 billion soums in 2027, and in 2022 prices it was predicted to be 25126.77
billion soums.
The insurance industry is different from other types of business in many ways. A
single wrong decision by an insurer, a deviation from strategic plans, can jeopardize
the business, lead to a financial crisis, and ultimately lead to customer distrust. The
development of the national insurance market and customer recognition of the industry
depend on these factors.
REFERENCES ( S pisok ispolzovannoy literatury / References):
1. http://www.imda.uz – information from the official website of the Insurance
Market Development Agency of the Republic of Uzbekistan.
2. Annual reports of the Insurance Market Development Agency and official data
of the Statistics Agency.
3. Resolution of the President of the Republic of Uzbekistan No. PP-4412 dated
August 2, 2019 “On measures to reform the insurance market of the Republic of
Uzbekistan and ensure its accelerated development”.
4. Badalov A.D. Investment climate and ego influence and economic truth:
empirical
analysis.
Scientific-analytical
magazine
"Economics:
time
and
econometrics", 2020. 2(8), 62-70.
