October 27, 2023

Voluntary insurance in Uzbekistan.

Content.

  1. Voluntary insurance in Uzbekistan.
  2. Legislative acts.
  3. Voluntary insurance contract.
  4. Insurance rules.
  5. Licensing of insurance activities.
  6. Types of voluntary insurance.

Voluntary insurance in Uzbekistan.

In modern realities, nature, economy, technological progress, and politics generate more and more new risks for human life and activity. To protect one’s life, property, and business from unforeseen risks and accidents, insurance can be a guarantor to ensure compensation for losses incurred.

For example, according to one of the world’s largest insurance organizations Munich Re, 850 catastrophic events were registered in 2018 alone, of which storms accounted for 42%, floods and landslides – 46%, geophysical events (earthquakes, tsunamis, and volcanic eruptions) – 5% of the total; heat, cold and fires – 7%. The following continents were most affected:

— Asia (43%);

— North America (20%);

— Europe (14%); and

— Africa (13%).

According to the organization, the total economic losses in 2018 amounted to 160 billion US dollars, of which 80 billion dollars were insured. This example shows what losses natural disasters can lead to, and how in such cases insurance helps to save a business.

In the Republic of Uzbekistan, insurance is carried out on the basis of an insurance contract concluded between the policyholder and the insurer. It can be of two types – voluntary and mandatory. This Memorandum describes a voluntary form of insurance. You can find out about compulsory insurance in the Republic of Uzbekistan on our website by clicking on the link.

Legislation.

  1. Law of the Republic of Uzbekistan, No. LRU-730 dated 11/23/2021 “On insurance activities”;
  2. The Civil Code of the Republic of Uzbekistan dated 29.08.2019, part II;
  3. Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No. PKM-80 dated 01.03.2022 “On approval of the Unified Regulation on the procedure for licensing certain types of activities through a special electronic system”;
  4. Decree of the President of the Republic of Uzbekistan dated 07.12.2018, UP-No. 5590 “On comprehensive measures to improve the healthcare system of the Republic of Uzbekistan”.

Voluntary insurance contract.

This type of insurance is carried out on the basis of a) Contract and b) Insurance Rules.

In the insurance contract between the policyholder (a legal entity or a capable individual who enters into an insurance contract with the insurer and pays an insurance premium — insurance premiums) and the insurer (a legal entity that is a commercial organization that has a license to carry out insurance of the appropriate type and accepts, in accordance with the insurance contract, an obligation to pay insurance compensation — insurance payments), the essential conditions of insurance must be specified, reflecting the basic concepts of the insurance rules.

In accordance with the legislation, in order to conclude an insurance contract, the following conditions must be agreed between the parties:

  • object;
  • deadlines;
  • insurance amount and premium;
  • rights and obligations of the parties;
  • responsibility;
  • the procedure for resolving disputes when they occur.

If additional conditions arise between the parties during the conclusion of the insurance contract, they can also prescribe them in the contract.

It is also worth noting that the insurance contract is concluded in writing or electronically. After the agreement of the insurer and the policyholder on the conclusion of the insurance contract, the latter pays the insurance premium in accordance with the procedure, terms, and amount established in the insurance contract, and the insurer undertakes to pay the insurance indemnity upon the occurrence of a certain event (insured event) specified in the insurance contract.

Insurance rules.

On the basis of the legislation of the Republic of Uzbekistan, the insurance rules are adopted and approved by the insurer or the association of insurers and must contain the main provisions of insurance. They consist of the following concepts:

  • insurance entities — insurers, insurance intermediaries, adjusters, actuaries, insurance surveyors, assistance;
  • objects of insurance – life insurance, medical insurance, property insurance, financial risk insurance, business risk insurance, civil liability insurance, etc.;
  • insured events – an event specified in the contract, after the occurrence of which the insurer pays the insurance benefit on the basis of the contract;
  • insurance risks — an expected event, in case of occurrence of which insurance is carried out;
  • the procedure for determining the sum insured, the insurance tariff, and the insurance premium (insurance premiums);
  • the procedure for concluding, executing, and terminating insurance contracts;
  • rights and obligations of the parties;
  • procedure for determining the amount of losses or damage;
  • procedure for determining insurance compensation;
  • terms of insurance compensation, as well as an exhaustive list of grounds for refusal of insurance compensation and other provisions.

Licensing of insurance activities. Application for a license to carry out insurance activities. 

The application is submitted through the information system “License” (hereinafter referred to as “IP License”) (https://license.gov.uz /) or through the “Unified Portal of Interactive Public Services of the Republic of Uzbekistan” (hereinafter UPIPS) (https://my.gov.uz/), it is necessary to submit an application in which the following data should be reflected:

  • name, organizational, and legal form of the legal entity;
  • postal address and contact details;
  • name of the banking institution and bank account number;
  • TIN (Tax Identification Number);
  • classification by branches of insurance activity (life insurance, general insurance, compulsory insurance; reinsurance);
  • the reason for submitting the application (obtaining a license, renewal);
  • applicant’s consent to comply with licensing requirements and rules;
  • information on the compliance of the head and chief accountant of the applicant with the qualification requirements established by the authorized state body;
  • a document confirming the formation of the authorized capital of at least the established minimum size (a certificate from the bank, information on the placement of shares by the Central Securities Depository, and a bank account statement as of the date of filing the application).

Based on the choice of classification of insurance activities, based on Appendix No. 6 of the RCM No. 80, the applicant must fulfill additional conditions depending on the indexing of the license.

The term of consideration of the application is 20 days. The amount of the state fee for the consideration of the application is 5 BCV (Basic Calculated Values) and for the issuance of a license – 10 BCV.

Types of voluntary insurance.

Insurance activities of insurers, reinsurers, and insurance brokers are carried out on the basis of licenses issued by the Insurance Market Development Agency under the Ministry of Finance of the Republic of Uzbekistan. I would especially like to emphasize to readers that a license is issued to an insurer to carry out insurance activities either in the field of life insurance, in the field of general insurance, or exclusively for reinsurance. That is, an insurer carrying out insurance activities in the field of life insurance is not entitled to carry out insurance activities in the field of general insurance, with the exception of certain types (classes) in the field of general insurance determined by law. An insurer carrying out insurance activities in the field of general insurance is not entitled to carry out insurance activities in the field of life insurance. An insurer engaged in insurance activities exclusively for reinsurance is not entitled to conclude insurance contracts.

For reference: The RCM No.80, the Civil Code, and other legislative acts specify the types of compulsory insurance:

  • Employer liability insurance;
  • Carrier liability insurance;
  • Compulsory civil liability insurance in case of an accident at a hazardous production facility;
  • Liability insurance of vehicle owners;
  • Compulsory insurance of construction risks;
  • Mandatory personal insurance;
  • Mandatory insurance in the storage contract;
  • Collateral insurance;
  • Insurance of property pledged under a mortgage agreement;
  • Compulsory insurance in the provision of financial services;
  • Tour operator’s civil liability insurance;
  • Compulsory state insurance.

It is necessary to note, that the legislation does not prescribe a list of types of voluntary insurance, however, based on the above mandatory types of insurance and using the method of excluding them from the classifier of insurance activities, we can determine that there are the following types of voluntary insurance:

Life insurance:

life and annuities — a set of types of life insurance valid for a period of more than 1 year, which provides for the obligations of the insurer to pay insurance amounts in the following cases:

(a) residence of the insured person until the end of the insurance period or until the age specified in the insurance contract,

(b) death of the insured,

(c) as well as current payments (annuities) during the term of the insurance contract,

marriage and birth — a set of types of life insurance, valid for a period of more than 1 year, providing for the payment of the sum insured at the time of marriage or the birth of a child;

— long-term life insurance — a complex of types of life insurance combined with the payment of a lifetime annuity;

— life insurance to cover obligations – a set of life insurance before the occurrence of a certain event (survival before the end of the loan term), ensuring the payment of the insured amount under this obligation to the beneficiaries of the insured person and (or) to the person who has the obligations of the insured person in case of death of the insured person before the occurrence of this event (survival before the end of the loan term or full fulfillment of another obligation) or full fulfillment of another obligation) without insurance payment (without refund of the insurance premium);

— voluntary long—term pension insurance – a set of types of life insurance, which is carried out by the insured person and provides for the payment of insurance amounts in the form of a monthly annuity or a lump sum payment specified in the insurance contract when the insured person reaches retirement age;

— life insurance with return of capital — a set of types of life insurance with the participation of the policyholder in resolving the issue of placement and identification of the investment object within the guaranteed amount of insurance premiums and insurance payments paid and payment terms established by the insurance contract, provided that the policyholder participates in the risk of non-return of deposited funds;

— health insurance is a set of types of life insurance that provides for the payment of insurance amounts in case of disability as a result of an accident or serious bodily injury due to illness, provided that the specified insurance period is set for at least 5 years or until the insured reaches retirement age. The insurance period specified in the contract cannot be canceled or changed by the insurer unilaterally.

General types of insurance:

— accident insurance:

(a) serious injury to health as a result of an accident,

(b) in case of death as a result of an accident,

(c) loss of ability to work as a result of illness or a certain type of illness, including occupational injuries and occupational diseases;

— insurance in order to protect against diseases — a set of types of insurance that provides for the payment of a certain amount of money or monetary compensation (or a combination thereof) to the policyholder in case of illness or loss of health.

— medical insurance — a set of types of insurance that ensure that the insured person receives medical care in accordance with the conditions specified in the insurance contract. At the time of publication of the Memorandum, this type of insurance is voluntary. However, on the basis of the Decree of the President of the Republic of Uzbekistan No. DP-5590 dated 07.12.2018 “On comprehensive measures to radically improve the healthcare system of the Republic of Uzbekistan”, the issue of transferring this type of insurance to the mandatory category is being considered.