To improve population’s financial literacy the National bank of Tajikistan jointly with partners held the Festival of Financial literacy in Khujand, the capital of the northern province of Sughd.
Financial literacy is the possession of skills, knowledge, and behaviors that allow an individual to make informed decisions regarding money. Financially sophisticated individuals are good at financial calculations; they understand interest rate compounding, which helps them to engage in low-credit borrowing. Most of the time, unsophisticated individuals pay high costs for their debt borrowing.
A large-scale event on this subject for everyone was held at the Khujand Theater named after Kamol Khujandi on October 26.
Representatives of financial and credit institutions, insurance and international companies as well as educational institutions reportedly participated in the event.
This is the second time that the private insurance and reinsurance company, Spitamen Insurance, has participated in this festival.
The company top manager Buzurgjamil Rahmonov has been invited to participate in the event as a speaker on behalf of the country’s insurance companies. He has reportedly made a presentation on “The Insurance System of the Republic of Tajikistan”, spoke about the insurance products and state and development of the country's insurance market.
Spitamen Insurance has operated in Tajikistan since 2009, offering all types of insurance and reinsurance services.
Recall, the Tajik government in late March 2020 revised minimum capital requirements for insurance companies upwards to 2 million somonis and 50 million somonis, depending on the forms of property.
The insurance and reinsurance companies were given a year to comply with the revised minimum capital requirements, until April 1, 2021.
Reinsurance is insurance that an insurance company purchases from another insurance company to insulate itself (at least in part) from the risk of a major claims event. With reinsurance, the company passes on ("cedes") some part of its own insurance liabilities to the other insurance company. The company that purchases the reinsurance policy is called a "ceding company" or "cedent" or "cedant" under most arrangements. The company issuing the reinsurance policy is referred to as the "reinsurer". In the classic case, reinsurance allows insurance companies to remain solvent after major claims events, such as major disasters like hurricanes and wildfires
The previous minimum capital requirements for insurance companies were 5 million somonis for state-run insurance companies and 500,000 somonis for private insurers.
The new minimum capital requirements for the insurance companies are: not less than 10 million somonis for state-run insurance companies; 2 million somonis for private insurance companies dealing only with “general insurance category; not less than 10 million somonis for private insurance companies dealing with compulsory insurance along with other categories of insurance; not less than 5 million somonis for private insurance companies dealing only with “general insurance” category; and not less than 50 million somonis for state-run and private reinsurance companies.
The authorities justified their decision to revise the minimum capital requirements for insurance companies by saying that “the share of insurance penetration into the economy is equal to only 0.7 percent of the country’s gross domestic product (GDP), which is one of the lowest rates in the world, and this indicator directly depends on the low requirements for the authorized capital.”
Among the prevailing classes in the market it is worth noting property insurance, personal insurance, liability insurance and life insurance.
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