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PROSPECTS FOR IMPROVING INVESTMENT ACTIVITY IN
INSURANCE COMPANIES
Umarova Gulnora Akromovna
Senior Lecturer at Tashkent State University of Economics
gumarova928@gmail.com
Abstract: This scientific article studies the issues of improving the
investment activities of insurance organizations. The role of investment activities
in ensuring the financial stability of insurance companies and expanding their
income base is emphasized. The work analyzes the current situation in the
insurance market of Uzbekistan and compares it with foreign experience. Also,
problems in the structure of investments, performance indicators and investment
policy of insurance organizations are identified, and proposals and
recommendations are developed to eliminate them. The results of the study suggest
approaches aimed at diversifying the investment portfolio of insurance companies,
managing risks and optimizing the investment strategy.
Keywords: Insurance organizations, investment activities, financial stability,
investment portfolio, risk management, profitability, diversification, investment
policy, insurance market, economic efficiency
.
Introduction. In a market economy, insurance organizations are recognized
as one of the most important institutions that contribute not only to reducing the
financial risks of the population and business entities, but also to economic stability
through investment activities. The correct allocation of collected insurance
premiums by insurance organizations and their transformation into effective
investments is of great importance in increasing the level of financial stability and
competitiveness.
Investment activities serve as a means of expanding the income base of
insurance companies, maintaining and increasing insurance reserves, as well as
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making capital investments in various sectors of the economy. However, the
insufficient effectiveness of existing investment strategies, the underdevelopment
of financial markets, and the imperfection of the regulatory and legal framework
are among the pressing problems in this area.
The main goal of this article is to conduct an in-depth analysis of the
investment activities of insurance organizations, identify existing problems and
develop proposals and recommendations to eliminate them. This will allow the
investment potential of the insurance sector to be fully realized and their role in the
national economy to be strengthened. In world practice, the financial stability of
insurance companies, which are an important segment of the financial market, is
determined primarily by their investment activity, solvency and the amount of
insurance reserves. According to data provided by major international rating
companies, there is a high correlation between the level of well-being of the
population (GDP per capita) and the share of insurance premiums in GDP, which
indicates the financial stability of the insurance market of leading developed
countries. In recent years, as a result of the implementation of reforms in the
development of the insurance market in our country, the share of insurance services
in GDP has been increasing. Increasing the financial stability of insurance
companies is not only important for ensuring timely fulfillment of obligations to
creditors, but also for increasing additional investment opportunities.
As of 2024, a total of 33 insurance companies were operating in Uzbekistan,
of which 28 were in the general insurance sector and the remaining 5 were in the
life insurance sector. If we compare the authorized capital of insurance companies,
it amounted to 2.964 trillion soums as of 2024, which is an increase of 28.9%
compared to the same period last year (Table 1).
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Table 1
–
Structure of the Insurance Market in Uzbekistan
No. Structure of the Insurance
Market
2023
2024
Change
(+,-)
1
Number
of
insurance
organizations, including life
insurance
38 / 7
33 / 5
-13.2% /
-28.6%
2
Total
charter
capital
of
insurance organizations (mln.
UZS)
2,299
2,964
+28.9%
3
Number of insurance brokers
8
11
+37.5%
4
Number of actuaries
5
5
0%
5
Number of insurance agents,
including legal entities
4,736 /
1,711
4,804 /
1,704
+1.4% /
-0.4%
6
Number
of
insurance
organizations that are members
of the Guarantee Fund
26
25
-3.8%
Also, when we compare the indicators of the insurance market in 2023 and
2024, several important trends are observed. First of all, the number of insurance
companies decreased from 38 to 33, which is a decrease of 13.2%. In particular,
the number of companies engaged in life insurance decreased even more sharply -
by 28.6%. However, despite this decrease, the total authorized capital of companies
increased by 28.9%, which means that they are becoming financially stronger. The
number of insurance brokers increased from 8 to 11, which is an increase of 37.5%.
This indicates an increase in demand for intermediary services in the market. The
number of insurance agents also increased slightly, showing an increase of 1.4%,
1
Prepared by the author based on information from the official website of the National Agency for Promising
Projects of the Republic of Uzbekistan
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but the number of agents operating as legal entities decreased slightly - by 0.4%.
The number of actuaries has not changed - their number is five every two years.
The number of companies that are members of the Payment Guarantee Fund has
decreased from 26 to 25.
Table 2
–
Investment Activity of Insurers
No. Indicator Name
2023 (mln. UZS
/ % of total)
2024 (mln. UZS /
% of total)
Change
(+,-)
1
Total investments
6,149,938
/
100%
6,542,569 / 100% +6.4%
2
Deposits (savings)
4,037,369
/
65.6%
4,583,762 / 70.1% +13.5%
3
Securities
1,357,492
/
22.1%
1,303,756 / 19.9% -4.0%
4
Loans
46,864 / 0.8%
95,400 / 1.5%
+103.6%
5
Real estate
539,498 / 8.8%
452,745 / 6.9%
-16.1%
6
Participation in charter
funds
134,728 / 2.2%
98,480 / 1.5%
-26.9%
7
Other investments
33,988 / 0.6%
8,425 / 0.1%
-75.2%
The table shows that, when analyzing investments, total investments of
insurance companies increased by 6.4%. Their main direction remains bank
deposits - investments of this type increased by 13.5% and accounted for 70.1% of
total investments. Funds allocated to securities decreased by 4%, their share fell to
19.9%. The greatest growth was observed in loans - investments in this direction
increased by 103.6%. In contrast, investments in real estate decreased by 16.1%,
2
Prepared by the author based on information from the official website of the National Agency for Promising
Projects of the Republic of Uzbekistan
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participations in authorized capital by 26.9%, and other types of investments by
75.2%. In general, although the number of insurance companies is decreasing, their
financial potential is increasing, and investments are being directed to safer areas -
especially bank deposits. This indicates that companies are pursuing a stable and
prudent investment policy (Table 2).
The highest investment direction made by insurance companies is
investments in the form of deposits in commercial banks. Since today, among the
business interest rates in the economy, the interest rates offered by commercial
banks on deposits are high. It is also possible to see a relatively accelerated
investment activity of insurance companies in the real estate market, it should be
noted that this indicator increased by almost 50 percent during the analyzed period.
The indicator of the participation of insurance companies in the authorized capital
of organizations has a tendency to decrease, this situation can be explained by the
fact that the amount of dividends received on securities of investments made by
insurance companies remains unstable.
Diversification of investment activities primarily involves the stability of the
investment portfolio of an insurance company. As is known, the set of investment
projects to which insurance companies can contribute their funds depends on the
level of development of the capital market. Currently, temporarily idle funds of
investors can be placed in deposits of commercial banks, in securities, invested in
enterprises and real estate. Regulation of the structure and system of the investment
portfolio is usually carried out by setting minimum and maximum limits for the
types of funds invested.
Conclusion. The results of the study showed that the investment activities of
insurance organizations in Uzbekistan are mainly formed in a conservative
direction, with a large part of the portfolio being directed to short-term deposits and
government bonds. This situation, while emphasizing the need to ensure liquidity
for insurance companies, reduces long-term profitability. The increase in the share
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of corporate bonds and shares in the portfolio can be evaluated as a positive change,
as it shows that insurance companies are striving to increase profitability and
diversify the portfolio. However, it is necessary to further strengthen the risk
management system in relation to high-risk segments of investments.
As international experience shows, to ensure the stable financial condition
of insurance companies, it is important to develop an investment policy based on a
comprehensive approach, as well as to create a favorable legal and financial
environment by the state.
Therefore, in order to improve the investment activities of insurance
organizations, it is necessary to:
• continue to diversify the investment portfolio;
• modernize the risk management system;
• take a cautious approach to high
-yielding but risky assets;
• strengthen institutional support by the state.
When these recommendations are implemented, the efficiency of investment
activities of the insurance market of Uzbekistan will increase, which will have a
positive impact on overall economic development.
References:
1. Abdurahmonov Q.X., Mehnat resurslarini boshqarish. 2014.
2. M.S. Davidova, Concept for Establishing a National Reinsurance Company,
Financial University, Moscow, Russia, 2017
3. Antyushina V.V., “European Solvency Standards and Insolvency of Insurers
and Their Impact on the Financial Sector,” Economics and Business Journal,
2020, Issue 1/5
4. Shaislamova N.K., “Ins
urance Investment Risks Management as an Effective
Tool,” Economics and Finance Journal, 2022
5. S. Mirzoyev, “Underwriting Services in Ensuring the Financial Stability and
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Balance of Insurance Portfolios,” Green Economy and Development Journal,
2023
6. M. Islomov, “The Role of Investments in Strengthening Financial Stability of
Insurance Companies,” Economics and Education, No. 1, 2020
7. D. Qodirov, “Forming Investment Policy for Insurance Companies,”
Economics and Business Journal, 2021, Issue 1/5
8. Corfee-Morlot J., et al. Towards a Green Investment Policy Framework: The
Case of Low-Carbon, Climate-Resilient Infrastructure, OECD Environment
Working Papers, 2012, No. 48
9. The Global Risks Report 2020, World Economic Forum
10. https://napp.uz
