Controversial decree shifts Kyrgyz insurance to state hands

Controversial decree shifts Kyrgyz insurance to state hands | Insurance Business Asia

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Controversial decree shifts Kyrgyz insurance to state hands

The decision is met with outcry from the private insurance sector

A recent decree by Kyrgyz President Sadyr Zhaparov is stirring concerns among private insurance companies in Kyrgyzstan.

The mandate requires all state bodies and local governments to insure their properties exclusively with the State Insurance Organization (JSC SIO), a move said to foster the development of the national insurance market. This policy has sparked controversy, with private insurers arguing that it violates existing laws that ensure free market competition and entrepreneur rights.

“The Cabinet of Ministers of the Kyrgyz Republic will define JSC SIO as the national operator for reinsurance, including export risks, within the framework of cooperation with the Eurasian Reinsurance Company,” the president’s directive said.

This policy shift is part of a broader strategy to enhance the state-owned insurer’s financial standing, with plans to incrementally increase its authorized capital from 1 billion som last year to 5 billion som by 2027. Additionally, all profits from JSC SIO are slated to be reinvested to further this capital increase.

The private insurance sector views the decree as a direct violation of existing Kyrgyz law. The law currently in force, titled “On Organization of Insurance in the Kyrgyz Republic”, prohibits such state interference in insurance activities. Private insurers argue that the decree contravenes the principles of business non-interference, equal rights, and competitive conditions as guaranteed under national legislation.

In response to the decree, the Kyrgyz Association of Insurers has sought support from human rights groups to defend their interests, highlighting concerns over the state’s monopolistic approach which they argue undermines fair competition. This contention is backed by the International Business Council, representing the interests of private insurance firms, which has articulated that the decree infringes on the rights of entrepreneurs to equal access to financial resources and fair market conditions.

The current landscape of the Kyrgyz insurance market includes 15 companies, featuring several international firms from China and Kazakhstan. According to sources close to the industry, the majority of significant national companies have already transitioned to JSC SIO, leaving only specific lines like health, life, and auto insurance to private competitors.