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DEVELOPMENT OF INSURANCE CULTURE IN UZBEKISTAN
PhD
Umarov Hasan
Westminster International University in Tashkent
ORCID: 0000-0001-5852-9669
PhD
Karalev Yury
Westminster International University in Tashkent
ORCID: 0000-0002-7178-7563
Abstract.
The present article is devoted to the study of key indicators of the insurance
market of Uzbekistan, characterizing the state of insurance culture of the country's population
and the analysis of factors influencing the formation and development of the level of insurance
culture. The authors proposed recommendations to improve the insurance culture of the
population, which in the future will contribute to the sustainable development of the country’s
insurance market.
Keywords
.
Uzbekistan, insurance culture, financial literacy, level of trust in insurance.
O
‘
ZBEKISTONDA SUG
‘
URTA MADANIYATINING RIVOJLANISHI
i.f.n.
Umarov Xasan
Toshkent shahridagi Xalqaro Vestminster universiteti
i.f.n.
Korolev Yuriy
Международный Вестминстерский университет в городе Ташкенте
Annotatsiya
.
Ushbu maqola O‘zbekiston sug‘urta bozorining asosiy ko‘rsatkichlarini
o‘rganish, mamlakat aholisining sug‘urta madaniyati holatini tavsiflash hamda sug‘urta
madaniyati darajasining shakllanishi va rivojlanishiga ta’sir etuvchi om
illarni tahlil qilishga
bag‘ishlangan. Mualliflar aholining sug‘urta madaniyatini oshirish bo‘yicha tavsiyalarni taklif
etadi, bu esa uzoq muddatli istiqbolda mamlakatimiz sug‘urta bozorining barqaror rivojlanishiga
xizmat qiladi.
Kalit so
‘
zlar.
O‘zbekiston, sug‘urta madaniyati, moliyaviy savodxonlik, sug‘
urtaga bo
‘
lgan
ishonch darajasi.
РАЗВИТИЕ СТРАХОВОЙ КУЛЬТУРЫ В УЗБЕКИСТАНЕ
к.э.н.
Умаров Хасан
Международный Вестминстерский университет в городе Ташкенте
к
.
э
.
н
.
Королев
Юрий
Международный Вестминстерский университет в городе Ташкенте
Аннотация
.
Настоящая статья посвящена изучению ключевых показателей
страхового рынка Узбекистана, характеризующих состояние страховой культуры населения
страны и анализу факторов, оказывающих влияние на формирование и уровень ее развития.
Авторами предложены рекомендации по повышению страховой культуры населения, что в
перспективе будет способствовать устойчивому развитию страхового рынка страны.
Ключевые слова.
Узбекистан, страховая культура, финансовая грамотность, уровень
доверия к страхованию.
UOʻK:
347.764
826-832
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II SON. 2025
827
Introduction.
In the conditions of rapid economic transformations and increasing welfare of the
population in the Republic of Uzbekistan the formation of insurance culture is considered as
one of the key factors of ensuring financial stability of the society. Despite positive dynamics of
the local insurance market in recent years, the level of insurance penetration in the everyday
life of citizens still remains low.
Insurance services in Uzbekistan are not yet widely popular, especially compared to
foreign countries. This is due to a number of factors, including limited understanding of the
essence and principles of insurance, low level of trust in insurance companies’ activities, lack of
available funds to purchase insurance policies as well as religious beliefs of people about the
incompatibility of insurance with the principles of Shariah. These factors together with low
financial literacy and paternalistic attitudes of the majority of the population form institutional
barriers to the development of a full-fledged insurance protection system.
The current situation requires a comprehensive analysis and development of effective
approaches to create a sustainable demand for insurance services and increase the level of trust
in insurance institutions. This, in turn, will be an important factor in the development of a
competitive insurance market in Uzbekistan, strengthening financial stability and ensuring
long-term economic growth of the society.
Literature review.
There are relatively limited scientific articles regarding the investigation of problems of
financial literacy of the population in general and insurance culture in particular, especially in
emerging markets. Available foreign literature emphasizes that a high level of financial
awareness of the population is closely related to the stability of the financial system and the
depth of penetration of insurance services in the economy. International studies conducted by
OECD, IAIS Swiss Re and SCOR confirm the existence of a stable correlation between the level
of financial literacy and the maturity of the insurance market.
According to Kuzina's (2019) research, financial literacy includes basic competencies in
the sphere of personal finance management and informed consumption of financial products.
Tsakaev (2024) in his works reveals the concept of insurance culture via risk management
system and propensity to insurance and offers his own model of quantitative assessment based
on the ratings of insurance companies. According to him, the level of insurance culture will be
positively influenced by the growth of income and availability of insurance services, as well as
by the experience of using a variety of insurance products together with the client-oriented
approach of insurers aimed at long-term mutually beneficial relations with policyholders.
In turn, Lusardi (2009) emphasizes the importance of understanding complex interest
rates, the differences between nominal and real values and the basics of risk diversification as
these aspects are critical to perceive insurance not as a cost commitment, but as an investment
in financial sustainability. Bongini, Cucinelli and Soana (2023) investigated such factors as age,
education, employment and marital status of a person and their influence on the probability of
buying different types of insurance on the purchase of insurance products. Their investigation
has confirmed that all these demographic factors have a direct impact on the ownership of
insurance products, especially in areas where the understanding of conditions and risks is
critical. At the same time, insurance culture remains an important independent predictor and
people with higher levels of insurance literacy are more likely to purchase life and health
insurance products.
In the context of Uzbekistan, there is a lack of comprehensive empirical research on
insurance culture. This study seeks to fill the gap in the scientific study of this issue concerning
the Uzbek insurance market.
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Research methodology.
The methods of logical and structural analysis, grouping, economic and statistical analysis
and mutual and comparative analysis were effectively used in the realization of the set research
objectives.
Analysis and discussions.
Over the past few years, Uzbeki
stan’s insurance market has experienced rapid expansion,
showing substantial growth in local currency terms. This development has been fueled by
various factors, such as an inflow of foreign investments, a surge in construction activity, the
relocation of Russian companies to Uzbekistan.
The government is undertaking substantial efforts to enhance the quality of development
in the local insurance market. In particular, on March 01, 2024, there was approved the
Presidential Resolution No. 108 on 01.03.2024
“Comprehensive Measures for the Further
Development of the Insurance Market”, developed by the insurance regulator –
National Agency
of Perspective Projects (hereinafter referred to as NAPP). This document is aimed at further
increasing the level of digitalization in the insurance industry, market capitalization,
introduction of several types of insurance based on best world practices, etc. A separate clause
stipulates the development and distribution of propaganda materials in mass media to
popularize insurance services, holding briefings, conferences and practical seminars in this
area.
Despite the good growth dynamics of the insurance market in Uzbekistan, it cannot yet be
said that insurance has penetrated into the everyday life of population and has become an
integral part of their financial planning. In the world practice several basic indicators
characterize the level of development of the insurance sector and accordingly, the level of
protection of the population and business from various risks. These are such indicators as:
- insurance density
- penetration rate
- loss ratio
- structure of the market in terms of life and non-life insurance.
In accordance with the reports of the regular reports of well-known institutions, like
OECD, Swiss Re, IAIS, the global benchmark shows that insurance markets in developed
economies are characterized by high insurance density (premiums per capita), exceeding $850
($3,300 in advanced markets) per capita, insurance penetration rates (premiums as a
percentage of GDP) reaching 8
–
10% of GDP and high loss ratio (ratio of insurance losses paid
out to premiums earned), exceeding 60%. Globally, the market structure tends to lean slightly
towards life insurance, which accounts for approximately 54% of total premiums. These
benchmarks highlight the strong correlation between economic development, financial literacy
and the maturity of insurance markets and reflect a higher degree of financial planning and
long-term savings behavior in advanced economies.
In contrast, the Uzbek insurance market, just like many other emerging markets, exhibits
much lower figures compared to global benchmarks, indicating an underinsurance of
significant portion of the economy and population.
As it can be seen in Table 1, as of the end 2024 non-life insurance sector represented over
97% of the total gross written premium in the insurance market. The life insurance segment
experienced a sharp decline in 2023, primarily due to the elimination of the personal income
tax exemption for long-term life insurance policies. Despite the growth of insurance density in
local currency terms, it is lower than the global average level by 40 times. All the rest basic
indicators (loss ratio, insurance penetration rate, share of life insurance market) demonstrate
a downward trend for the last 2 years.
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Table 1.
Main indicators of the insurance market of Uzbekistan for the period 2021-2024
2021
2022
2023
2024
Insurance premiums (in bln. UZS)
3 732
6 232
8 060
9 770
Insurance premiums growth (%)
69
67
29
21
Share of non-life insurance (%)
81
76
96
97
Share of life insurance (%)
19
24
4
3
Insurance payments (in bln. UZS)
1 235
2 597
2 022
2 205
Insurance payments growth (%)
68
110
-22
9
Share of retail segment (%)
35
39
23
22
Share of commercial segment (%)
65
61
77
78
Number of signed insurance contracts
6 959
969
7 010
763
8 849 939
9 240 859
Loss ratio (%)
33
42
25
23
Insurance density (in UZS)
107 990
176 680
219 015
260 236
Insurance penetration rate (%)
0.51
0.70
0.68
0.67
Source
:
prepared by the authors based on annual reports, statistical information of the insurance
regulator of Uzbekistan for the period 2021-2024.
The main reasons behind these trends include, first of all, the low level of insurance
culture among population, where awareness and understanding of the role of insurance as a
financial protection tool remain quite limited.
First of all, it is necessary to define the meaning of insurance culture. Insurance culture is
a set of beliefs, values and knowledge in the field of insurance business and models of behavior
within an insurance company, as well as a broad outlook that contributes to the understanding
of the essence of insurance to use it in public life. Unfortunately, the role of insurance is not fully
realized in Uzbekistan due to the fact that most part of population lacks the skills and
knowledge to effectively manage their financial resources, make informed decisions in the field
of personal finance, plan income and expenditures, avoid unnecessary risks or take the right
measures to manage them. In addition, there are a distrust in the activities of insurance
companies on the side of population, low growth of their real incomes, religious beliefs
regarding insurance as a non
–
Sharia-compliant instrument and paternalistic attitude of a
certain part of the population, especially older people, who count on insurance guarantees,
provided by the state at the expense of budgetary resources.
According to the Central Bank of the Republic of Uzbekistan, only about 30% of the
population has a basic understanding of basic financial concepts. Among young people this
figure is even lower accounting for only 25%. In accordance with the 2020 Financial Capability
Survey, only 14% of respondents reported being aware of the various insurance products and
services and from those, 24% reported using some form of insurance to manage risks.
Obviously, most people do not yet have a clear understanding of the key fundamentals of
insurance, the benefits of insurance for individuals and for society as a whole. This
understanding can be developed through knowledge of insurance and can be derived from
education, professional activities in the insurance industry or in other fields, related to risk
management as well as from personal experience.
Education is undoubtedly the key and most significant source of insurance literacy
formation. Currently, many higher educational institutions have introduced insurance
disciplines (Tashkent State University of Economics, National University of Uzbekistan,
Westminster International University in Tashkent, etc.), within which students receive basic
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theoretical knowledge in the field of insurance and risk management, familiarize themselves
with the main insurance products, etc.
But little attention is paid to covering the basics of insurance in school institutions. For
example, in the curriculum for schools for the 2024-2025 academic year there are no subjects
on finance, not to mention insurance. According to research of a number of scientists, it is a high
school, where students’ worldview is formed, the primary understanding of economic
mechanisms and behavioral patterns related to the management of personal finances.
In this regard, it seems reasonable to familiarize high school students (8-9 grades) more
deeply with the essence of insurance, some types of insurance that are designed to protect the
interests of individuals (property insurance, comprehensive motor insurance, health insurance,
life insurance, etc.), so that they develop a basic understanding of the role of insurance in
ensuring their financial security, the importance of risk management. In higher education
institutions they could already study in more depth international practices, peculiarities of
some types of insurance, which have not been introduced or poorly implemented in the country
(cyber risk insurance, D&O insurance, factoring operations insurance, business interruption
insurance, etc.).
It is worth noting that most insurance companies are now experiencing a shortage of
qualified personnel who can help them in interacting with the international market,
underwriting various risks received via reinsurance. It is also no secret that the majority of
employees working in insurance organizations have received higher education not in the field
of insurance. In order to improve the professional qualification of insurance companies'
employees, training courses on national and international programs need to be organized
based on university platforms. It is encouraging to note that in June 2024, one of the leading
insurance companies of Uzbekistan - KEIS of Uzbekinvest JSC - signed a memorandum of
cooperation with the globa
l educational institution “Chartered Insurance Institute” (CII),
established in 1912, whose qualifications and certificates in insurance business are recognized
all over the world.
In accordance with the agreement, the parties are planning to establish an Accredited
Professional Development Center (APDC) of CII on the basis of a branch of the Management
Development Institute of Singapore in Tashkent (MDIS Tashkent). It will make it possible to
start the process of training all specialists of the insurance market of Uzbekistan based on CII
syllabi. After all, an important factor in increasing the level of confidence of potential customers
in the insurance institute is the professionalism of insurance companies’ specialists, who can
properly consult potential clients on the essence of insurance, characteristics of different types
of insurance, accompany them in claim settlement process, etc. On a side note, duly fulfillment
of obligations by insurance companies before policyholders is the best way to promote
insurance, increase a trust of the population on insurance and enhance their insurance culture.
In addition, the reason for the poor development of insurance culture is the low level of
accessibility of information about insurance products and understanding of the mechanisms of
insurance contracts. In order to eliminate this problem, it is necessary to constantly work with
the population and promote the benefits of using individual insurance products. In addition to
outreach activities in “mahallas” and oth
er public places, it is necessary to actively use modern
communication channels, including social networks, television, radio and Internet platforms.
For those who refuse the services of traditional financial institutions for religious reasons, it is
necessary to tell about the advantages of takaful insurance (Islamic insurance), which works
very well in many Muslim countries of the world. In fact, some insurance companies in
Uzbekistan (Apex Insurance, TEMIRYO'L-SUG'URTA, GROSS INSURANCE, Mosaic Insurance
Group, NEO Insurance Corp.) are already offering insurance products, designed in accordance
with Shariah law.
Another factor of the low level of insurance culture of the population is considered to be
the low level of income of population. Indeed, the need for insurance among the population
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arises at a time when their income level is high enough and people begin to think about
protection of their health, property, etc. According to the National Statistics Committee under
the President of the Republic of Uzbekistan in 2024 the real aggregate income of the population
of Uzbekistan grew by 5.9% (see Table 2). Undoubtedly, the indicator of the aggregate income
of the population is still lagging behind the world average levels, but one cannot deny the fact
that there is a clear tendency of increasing incomes and living standards of citizens, which in
the long run entails other characteristic features of the insurance culture of citizens.
Table 2.
Real income of the population of Uzbekistan for the period 2021-2024
2021
2022
2023
2024
Total income per capita (in mln. UZS)
14.8
17.8
20.0
24.1
Inflation rate (in %)
9.98
12.25
8.77
10.2
Real growth rate of total income per
capita (in %)
9.9
7.3
2.4
5.9
Source
:
National Statistics Committee of the Republic of Uzbekistan.
Speaking about the development of insurance culture, it is important to mention the role
of the state regulator in applying tools that will contribute to the overall development of the
insurance market in general and insurance culture in particular. In order to increase the
transparency of insurance companies' activities and increase confidence in them, NAPP in
January 2025 launched a system of monthly rating of insurance companies based on 19 criteria,
such as timely processing of claims, loss ratio, adequacy of insurance reserves, etc. Since
September 2024 all insurance contracts are registered in the Unified Information System,
through which insurance policies with QR codes are issued. All these measures are aimed at
providing consumers with objective information about the quality of insurance services,
increasing satisfaction of policyholders with insurance companies, improving their financial
stability, etc.
Moreover, in order to enhance the level of development of the insurance market of
Uzbekistan, in the near future it is planned to introduce the methodology of formation of
insurance reserves and determination of insurers' solvency in accordance with Solvency II
norms, to increase the requirements for the minimum level of the authorized capital, to improve
many regulations governing the activities of insurance companies. The comprehensive
application of all these measures in the future should not only contribute to the growth of the
insurance market, but also play a key role in the formation of a sustainable insurance culture
among the population and business society.
Conclusion & Suggestions.
Undoubtedly, the creation of insurance culture among the population of Uzbekistan is
considered to be a long process that requires thorough work of both policyholders and insurers
and state regulatory bodies. The formation of a full-fledged insurance culture requires a
comprehensive approach, including the development of financial and insurance education from
the early stages of education, improving the quality of insurance services, enhancing the
transparency of insurers' activities, as well as the active involvement of the population in
insurance processes through information and awareness campaigns. A significant role in this
process is also played by the state regulator, which, using modern regulatory and supervisory
tools, seeks to increase confidence in insurance institutions and further strengthen insurance
culture.
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