Two laws, twenty years: how has insurance legislation in Uzbekistan been renewed?

Whether an insurance company can pay out on your policy depends largely on what requirements the law places on it. Over the past twenty years in Uzbekistan these requirements have been gathered in two comprehensive laws: in 2002 and in 2021.

Key points

1. The 2002 law. The Law "On Insurance Activities" was adopted on 5 April 2002 as No. 358-II (Spinform database). On the same day the Oliy Majlis adopted Resolution No. 359-II on putting it into effect (LexUZ).
2. The law said what insurance is. Article 3 of the 2002 law gave a definition of the concept of insurance. Its general meaning: when an insured event occurs, persons' interests are protected through a payment from the monetary funds accumulated by the insurer.
3. The path of the new law. The new Law "On Insurance Activities" was adopted by the Legislative Chamber on 15 June 2021 and approved by the Senate on 27 August 2021 (LexUZ). The President signed it on 23 November 2021 as No. ZRU-730, and it was set to come into force three months later (GRATA International).
4. The changeover date. The 2002 law and the resolution on putting it into effect lost force from 25 February 2022 (Spinform, LexUZ). Thus the 2002 law was in effect for nearly twenty years.
5. New concepts. According to the GRATA International commentary, the new law introduced the concepts of reinsurance, co-insurance, insurance pools, prudential standards and cross-border insurance ("insurance pools" here in the sense of an association of insurers). When the law was adopted, the Insurance Market Development Agency under the Ministry of Finance was named as the authorised state body.
6. The boundary is clearly drawn. Under Article 1 of the new law, it does not apply to relations connected with state social insurance and state health insurance. In other words, this law is mainly about the insurance market, that is, insurance companies and their clients.

Then and now

Example: how do three insurers share one risk?

The example below was compiled by the author; the figures are hypothetical (not a current tariff).

The hypothetical "Zarafshon to'qimachilik" textile company wants to insure its warehouse for 10 billion soum. For one company this risk is large, so three insurers agreed to co-insure it: "A" 50%, "B" 30%, "C" 20%. The hypothetical tariff is 1.2% a year.

Check: 10 billion × 1.2% = 120 million soum; 60 + 36 + 24 = 120 million soum; 1 000 + 600 + 400 = 2 000 million soum. Each insurer receives a premium according to its share and also covers the loss in the same share. The difference from reinsurance: here the company is directly linked with all three insurers, while in reinsurance the client sees only one company, which passes part of the risk on to another company.

Link with the previous period: in the 20th century insurance became mass through state social insurance and compulsory motor insurance; Uzbekistan's laws, by contrast, regulate the commercial insurance market separately. The next stage: the digital policy and online insurance services.