Insurance industry reviewed
- By Amarjargal Munkhbat -
- Jun 24,2023
On June 20, the parliament’s standing committee on economy held a meeting with 52.6 percent attendance. During which the relevant organizations talked about the legal framework and current situation of the insurance industry.
Head of the Financial Market and Insurance Department of the Financial Policy Sector of the Ministry of Finance L.Sonor presented the current situation and legal reforms in the insurance industry. He states, one of the three pillars of the financial sector, the insurance sector occupies a rather small share. By the end of 2022, the ratio of total premium income of the insurance industry to GDP in Mongolia is 0.63 percent, which is 10 times lower than the average of other countries. The main indicators of the insurance sector have been growing in the last decade, and by December 2022, the total assets of the companies in the sector have increased to 475 billion MNT. He added that the total premium income of the insurance industry has increased to 305 billion MNT. Then, Head of the Financial Regulatory Commission D.Bayarsaikhan added more information about the legal framework and current situation of the insurance industry.
As of today, insurance organizations operate through 254 companies, 395 insurance intermediary companies, 90 branches and representative offices of insurance damage assessment companies and provide services to more than 1.3 million insured citizens with 688 insurance products (one company averages over 30 insurance products). D.Bayarsaikhan presented that in the first five months of this year, the total assets of insurance companies increased by 11.6 percent from the same period of the previous year and reached 475 billion MNT. Considering the share of the total assets of insurance companies by type of insurer, the total assets of ordinary insurance companies are 398.2 billion MNT, the total assets of longterm insurance companies are 16.4 billion MNT, and the total assets of reinsurance companies are 60.3 billion MNT.
D.Bayarsaikhan then continued about livestock indexed insurance, which is insurance product that sets a threshold or index as a percentage of the loss of livestock in a given area and compensates policyholders who have insured their animals in a given area if the percentage of livestock loss exceeds that threshold. The government sets the threshold for the level of risk. For example, according to Government Resolution, the first threshold is five to six percent, and the second threshold is 25 to 30 percent. It was mentioned that the percentage of livestock indexed insurance coverage is very low, and by the end of 2022, 14.4 percent of all herding households and about eight percent of all livestock were covered by indexed livestock insurance. In this context, livestock valued at 117.9 billion MNT were insured and insurance premiums of 3.9 billion MNT were collected. After the census, cattle are considered sheltered, and if they exceed the threshold, compensation is paid to herdsmen.
Process on digitizing state services introduced
At the standing committee on innovation and digital policy’s meeting, they discussed digitizing state services and matters related to some law amendments. Minister of Digital Development and Communication N.Uchral
presented the progress of the order given by the standing committee on October 24, 2022. He said, “The government has decided to approve the list of software projects to be completed by the private sector. As a result, the government will not develop the system further. This means that it will not duplicate the work done by the private sector, but only define the policy. In the framework of this work, the www.mindgolia.mn software department store has been established and more than 380 products are located there.”
The Minister then remarked, “Every year, the government purchases software worth 950 billion MNT. The state is still a big buyer, but the systems are not interconnected. To open the legal possibility for the private sector to purchase the government by putting it on mindgolia, the state procurement department gave directions to connect mindgolia.mn and e-tender.mn. In the future, companies and enterprises will put their developed systems on mindgolia.mn and the government will buy them. Also, according to the 10-year plan presented by the private sector, the telecommunications sector is a large sector with sales of 1.6 trillion MNT, but the information technology sector is not able to sell much. Since the sales of the information technology sector is less than 0.3 percent of the gross domestic product, they are working to improve the legal environment to support software manufacturers.”
Bill on General Education Law discussed
At the standing committee meeting, the discussion was held about the General Education Law and education sector matters. Minister of Education and Science L.Enkh-Amgalan said that the evaluation level of the examination is being reformed. For example, mathematics will be reformed so that it becomes a base test, and it will be evaluated differently depending on level. He also said that in the 21st century, the program for acquiring digital and English language skills is being reformed.
After that, the first discussion of the amendment of Preschool and General Education Law was held. The working group formulated 33 proposals with differences in principle. Voting was conducted in accordance and each item was discussed.
The Minister presented information on the progress of the project to replace pit toilets in state-owned kindergartens, gen-
eral education schools, and dormitories with modern sanitary facilities. He said that the project will be implemented in four
stages where the first two will take place in 92 soums of 16 provinces. Of a total of 307 buildings, 183 started usages, 29 are
ready and 95 continue construction. Also, in stage three, 130 soums of 17 provinces, in stage four, 92 soums of 18 provinces will participate in the project of replacing schools, kindergartens and boarding houses with modern sanitary facilities. As of June 15, 35.6 billion MNT funding has been provided. The budget for each sanitary facility to be built in each subdistrict is different. For example, the budget for the sanitary facility of Khairkhan soum dormitory in Arkhangai Province is 267.1 million MNT, while the sanitary facility budget for Bulgan soum Secondary School in Bayan-Ulgii Province is 341.7 million MNT. In general, the actual cost of one object ranges between 160 and 180 million MNT, depending on the capacity of the kindergarten, secondary school, and dormitory.