Insurance business in Uzbekistan: state, perspectives and their coverage in the media
22 May 2008 INTERCONTINENTAL TASHKENT
Tashkent, Republic of Uzbekistan
An agreement on the creation of the first national insurance pool (risk pool) in Uzbekistan was signed during the "Insurance business in Uzbekistan: market condition, prospects and media coverage" on 22 May.
The project was initiated by the Temir Yullari Sugurta, Kafolat, ALSKOM, Kapital Sugurta, IShONCh, Madad and Toshkent Sugurta insurance companies. During the signing of the founding documents the parties to the agreement announced that the fund would comprise over 13.9 billion soums.
According to the agreement signed the pool would guarantee the coverage of large property and liability insurance risks, a large group of single-type risks, as well as risks associated with multi-model logistics envisaging the transportation of cargo by motor-road, railroad and sea transport.
On one hand, the creation of the pool is associated with the need of the pool members to protect their interests in participation in the insurance of large risks, and on the other hand it assists the achievement of market equilibrium, the satisfaction of the demand for the coverage of certain group of risks which the insurance companies are unable or unwilling to take individually.
An insurance pool (risk pool) is a voluntary agreement between insurance companies principally different from other forms of unions or associations and used to reduce their exposure to sudden and severe losses caused by large-scale risks. They thus carry solidary liability. The pool works on the basis of the common rules of insurance and tariffs, but this does not spread exclusively to the participation of the insurance company in the risks covered by the pool.
When part of the pool the insurance companies while transferring some of the specialised risks of theirs get a part of the risks on other types of insurance. This helps ensure the insurance portfolio diversification substantially raising the financial stability of each insurance company. Moreover, the activity of the insurance companies in the pool allows them not to change the worked-out specialisations of theirs and ensure the coverage of various risks without significant costs.
At the same time the members of the pool carry solidary responsibility and in case of insolvency of one of the participants of the pool other participants share the costs of the insurance payout. Moreover the pool achieves the optimal balance of cost and quality of insurance protection of a large-scale risk, which cannot always be achieved by individual insurance company.
It is obvious that with the implementation of large projects in the strategically important sectors of the economy such as the ones being run in Uzbekistan now there is a need for a reliable insurance protection. The instrument of reinsurance of large risks taken for insurance does not fully satisfy the needs even taking into account the pace of capitalization of the Uzbek insurance companies and the requirements of the legislation on compliance with the solvency requirements.
It is the instrument of co-insurance embodied in the first national risk pool that will allow the insurance companies unite their efforts in stimulating the development of the domestic insurance market through the expansion of the volume of insurance operations, development of their competitiveness, and most importantly provision of their financial stability.
Supported by Public Fund for Support and Development of Independent print media and news agencies of Uzbekistan
OFICIAL SUPPORT
Ministry of Finance of the Republic of Uzbekistan Chamber of Commerce and Industry of the Republic of Uzbekistan Association of Professional Participants of the Uzbek Insurance Market
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