UZBEKISTAN: UNDP helps develop the insurance sector in Uzbekistan

5 July 2021 — Marina MAGNAVAL
UNDP, together with the Agency for the Insurance Market Development at the Uzbek Ministry of Finance, organized a seminar on June 24, 2021, during which the results of the diagnostics of the development of inclusive insurance and risk financing in Uzbekistan were presented, UzDaily.uz reports.

It was noted that due to the vulnerability of Uzbekistan to natural disasters, which can bring devastating consequences for the economy and the population, as well as the insufficient development of the insurance market and the lack of tools for inclusive insurance and risk financing, the government, enterprises, and households of the country suffer financial losses amounting to millions of USD.

UNDP established a special Risk Insurance and Financing Fund (Mechanism) to provide technical assistance to countries participating in the climate risk insurance program, including Uzbekistan, to develop inclusive insurance, financing sovereign risks, and integrate insurance into development planning and financing processes. At the first stage, the task was set to diagnose the insurance industry in the country, and the results of this study, as well as the recommendations of experts on the development of this sector, were discussed during the seminar.

During the event, it was emphasized that the level of insurance penetration in Uzbekistan is exceptionally low - insurance premiums make up only 0.36% of GDP (in FY2020). And there is a real need for the development of inclusive insurance in Uzbekistan due to the number of the poor (12-15% of the total population at the beginning of 2020).

UNDP expert Sardor KOSHNAZAROV, during the seminar, noted that risk financing is another underdeveloped segment of the insurance market in Uzbekistan. So far, the risks of natural disasters have not been insured to a greater extent, and the financial losses incurred from them are mainly compensated from sources of the government funding. Therefore, it is necessary to develop new insurance products that will reduce the financial burden on the government, business, and households. His recommendations include proposals for improving legislation in this area, increasing the capacity of representatives of involved ministries and departments, the insurance industry, and the private sector in general, as well as raising public awareness of the possibilities of inclusive insurance and risk financing.

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