S&P`s opinion, country risks in Uzbekistan will continue to put pressure on the overall assessment of the industry and country risks of the insurance sector (Insurance Industry and Country Risk Assessment - IICRA). S&P believes that the economic situation will remain unfavorable for Uzbek insurers in the next two years. The IICRA assessment reflects the still weak but gradually developing institutional system in Uzbekistan.
S&P noted high concentration of the country's insurance sector: the five largest companies keep 56% of the non-life market. The state insurers account for 40% of total non-life GWP, although this share is gradually decreasing. The regulator announced gradual privatization of the insurance sector in Uzbekistan, putting up for sale a 25% stake in the state-owned KAFOLAT in August 2019.
A significant portion of the non-life GWP (83%) comes from three main LoB: property insurance (35%), financial risk insurance (31%) and motor insurance (17%), and the agency expects that such portfolio structure will not undergo significant changes in the next 2-3 years.
According to S&P, Uzbek insurance companies will be profitable in the coming year, despite the economic impact of the pandemic on the non-life sector. "This market is likely to see slight growth in 2020 due to a slowdown in economic activity. In 2021-2022, growth rates will pick up and will largely depend on regulatory measures aimed at further developing the insurance sector, the supply of new products and the dynamics of macroeconomic indicators. In our opinion, the institutional system will gradually improve, including in connection with the creation in the second half of 2019 of a separate body responsible for the regulation and development of the insurance sector" the agency said.