Agricultural insurance in Uzbekistan: Current status and need for structural changes

The insurance market in Uzbekistan is characterized by its heavy focus of risk management on strategic crops like cotton and wheat and the very close coupling of insurance with agricultural loans. The majority of farmers who received a subsidized production credit from the agricultural bank Uzagrobank are insuring their crops to become eligible for the said credits, which are mainly provided by the state agricultural insurance company Uzagrosugurta. While the importance of this credit-bundled insurance product is undisputed, this close loan bundling has led to a condition where, to date, most Uzbek farmers perceive the insurance product only as a condition for credit access rather than accepting it as a risk management strategy. Several policy reforms (e.g. presidential decrees and development strategies) aimed at improving the functionality of the insurance product beyond its credit collateral function and making it suitable to manage climate and irrigation risks. However, most of these reforms to date require large-scale transformations and come with high implementation cost and risk. In the scope of this policy brief, we provide policy recommendations towards a sustainable implementation of efficient financial climate-risk management in Uzbek agriculture based on several years of research and implementing activities of IAMO in Central Asia.