Overcoming the Insurance Protection Gap in Tajikistan: A Nationally Contextualized Model of Catastrophe Risk Insurance

Tajikistan faces high catastrophe exposure and yet its insurance market has limited capacity. The research proposes an insurance protection model tailored to the national Tajik context. The primary emphasis is on allocating responsibilities for covering catastrophic losses among government authorities, insurers, policyholders, and reinsurers, considering the country’s institutional and budgetary constraints. The methodology combines qualitative comparative institutional analysis, drawing on China’s experience, legal analysis, and simplified financial modeling. The proposed model combines government regulation, administration of the state-backed insurance program, the creation of an insurance or reinsurance pool, the use of parametric insurance and the introduction of compulsory liability insurance. Administration, insurance risk acceptance and supervision are differentiated, and government support is limited by pre-established budget limits. Administrators’ selection presupposes a transparent procedure. An illustrative computation, based on publicly available assessments of flood-related damages and predefined parameters of the insurance portfolio, demand, and funding, highlights the issue that the proposed model seeks to address. Under the accepted assumptions, subsidies expand insurance coverage and improve the expected financial outcome of insurance operations, but at the same time increase the shortfall in large losses if capital and government support for payments remain unchanged. The expansion of insurance coverage requires the coordinated development of mechanisms to ensure the fulfillment of obligations to policyholders. Its practical significance lies in creating conditions under which the expansion of insurance coverage goes with stronger financial capacity for disaster payouts. The model can serve as a basis for the launch of pilot projects after clarifying the parameters based on evidence, consulting with stakeholders, and evaluating resource constraints.