In recent years, financial risk insurance and property insurance have become increasingly important in the structure of the insurance market of Uzbekistan, which is facilitated by growing inward reinsurance. At the same time, life insurance has sharply decreased after abolition of tax incentives in 2023: its share fell from 25% in 2022 to only 2% in 2024, uzdaily.uz writes.

GWP in financial risk insurance has tripled over the period 2021-2024, significantly outpacing overall market growth. This insurance type protects banks and non-banking financial institutions from borrower default. In 2024, the payout ratio was 44%, which is higher than in other types of insurance, and, according to Fitch, may increase in 2025 - amid the expected peak amount of problem loans.

Inward reinsurance in 2024 increased by 30% to UZS 2,735 billion (~EUR 0.20 billion), which is about 28% of total premiums and 92% of the total charter capital of the sector. Fitch notes that the risks and underwriting strategies in this segment remain largely unexplored, which can lead to unstable results.

In terms of investments and assets, Uzbek insurers face high risks due to limited diversification. The main investments are in fixed-income instruments, primarily deposits in local banks, which Fitch rates at B and BB. This makes insurers vulnerable to credit and market risks of the country's banking system. In addition, the underdeveloped bond market in Uzbekistan limits opportunities for diversifying investment portfolios.

Amid tightening regulations, the country is introducing increased capital requirements. Insurers engaged in reinsurance will have to provide a minimum capital of up to UZS 120 billion by October 2029, while by October 2025 their minimum capital should be at least UZS 80 billion, the source writes.

* 1 EUR =13,436.01 UZS (December 31st, 2024)