Uzbekistan is among those Asian countries that adopted a series of economic and political measurers intended to boost their economy. Besides that, it should be noted that the Silk Road trade route, which for hundreds of years ran through the region and contributed to its development, has been reactivated by the area’s intensely exploited oil and gas fields. Consequently, the region’s insurance segment has started to gain a bigger share in the GDP as its countries register a highly dynamic yearon- year growth rate.

On the road to the West

With a population of about 27m, Uzbekistan has a very low degree of insurance penetration in GDP terms. However, despite the global recession and economic contraction among its major trading partners, the country continued its strong economic performance in 2009. Thus, the government responded to the recent global financial and economic crises with a well-structured and well-timed anti-crisis programme. GDP marked an 8.1% increase compared with 2008 and the services segment accounted for 47.2% of GDP, compared with 16.3% in 1991.

Last year also saw an 80% year-on-year increase in the total volume of the foreign investments, according to official statistics, especially in the industrial and communication fields.

Double-digit increase in 2009

In light of this evolution, particular attention has been paid to the insurance sector, which plays an important role in maintaining economic stability and public protection. Consequently, the Uzbek market has shown an annual double-digit growth over the last six years of between 16% and 62% in local currency terms.

There were 33 insurance companies in the market in 2009, which posted 2008 gross premiums of approximately EUR62.1m, up 62% (in local currency) on the year. Voluntary insurance was responsible for more than 74% of the total.

State-owned insurers contributed about 40% of the market’s total premiums, compared to 80% in 2002.

In addition, the introduction of the compulsory MTPL insurance in 2009 and compulsory liability insurance for employers represented new growth engines for the local industry. Nevertheless, voluntary insurance classes also saw an impressive increase in 2009, which contributed to a gradual decline of the compulsory MTPL share in the aggregate premiums for the reported period.

According to preliminary data, compulsory insurance premiums amounted to around 50% (of the total) in the first quarter of 2009, falling to 38.6% in the half year and to 32.9% in the first nine months.

The sudden intensification of activity in the voluntary insurance sector in the fourth quarter of 2009 led to further growth of this segment. As a result, the share of voluntary insurance premiums rose to 74.2%.

In 2009, Uzbek insurers paid EUR6.2m in claims, up 28% (in local currency terms) on the year. Considering that the growth rate of premiums rate exceeded the growth of paid claims, the total claims ratio declined on the year to 13.9% from 17.6% in 2008. It is also worth noting that during 2009 the number of claims received by insurers increased rapidly to a total of 5,700.

Who are the market leaders?

Each year sees a gradual decline in the concentration of the insurance market. In 2008 the five largest insurance companies accounted for more than 60% of the market while in 2009 this figure fell 4.5 points to 55.5%. The market leader had 18% of aggregate insurance premiums; the second-ranked company more than 14%. Other companies had market shares of less than 10%.

In terms of written premiums, the market leaders are stateowned companies UZAGROSUGURTA and UZBEKINVEST. The former specialises in agricultural insurance, but is also active in others areas, mostly in the retail business. However, the corporate segment accounts for 85,5% of the total premiums collected by UZBEKINVEST, ranked second in the local market. Generally speaking, of the market’s top 10 companies, in 2009, seven were operating in MTPL and compulsory employer’s liability insurance.

Uzbek insurers reinsure in 24 countries

The use of the reinsurance mechanism is an important contributor to the domestic insurance market’s stability. In 2009, 27 Uzbek insurers reinsured their risks, some to companies abroad. Indeed, that 83.6%% of the total volume of insurance premiums collected in 2009 was reinsured abroad is indicative of the trends in the reinsurance market.

In all, insurers reinsured risks in 24 foreign countries in 2009. The largest share went to the UK, which accounted of 42.5% of the total volume of insurance premiums reinsured abroad, with 29.7% going to Russia and 6.8% to Germany.

The largest share of insurance premiums reinsured abroad came from UZBEKINVEST, which reinsured its oil-and-gas risks and accounted for 8.7% of the total insurance premiums on the market. UVT Insurance, which reinsured its cotton supplies, came second with 8.1% and INGO Uzbekistan with its aviation risks which accounted for 4.1%, came third.

The rest of insurance premiums reinsured abroad came from 12 insurance organisations and totalled 3.1% of the total insurance premiums collected in 2009.

The future seems bright…

The Republic of Uzbekistan’s gross domestic product (GDP) will grow by 8.5% in 2010 and by 9% 2011, according to forecasts from the Asian Development Bank (ADB). In addition, the country’s recent economic achievements provide a sound opportunity for speeding up the transition to a sustainable and competitive economy. And according to local experts, in line with the general economic evolution, the insurance market will also maintain its double-digit annual increase. Legal reforms concerning insurance, the implementation of new technologies and Western practices on the market will further assist local companies in this direction.