A NEW MARKET OPPORTUNITY OPENS IN THE INSURANCE SECTOR

A NEW MARKET OPPORTUNITY OPENS IN THE INSURANCE SECTOR

In 2022, the State Great Khural (Parliament of Mongolia) amended the Law on Insurance and the Law on Procurement of Goods, Works and Services with State and Local Government Property, thereby creating a legal framework that allows insurance companies to issue guarantees for public procurement, mortgage down payments, and to provide guarantees to parties other than related entities.

To ensure effective implementation of these legal amendments and to further develop the newly introduced “Insurer’s Guarantee” product in the insurance sector, the Financial Regulatory Commission (FRC) convened and approved the relevant regulations. Based on current market demand and international best practices, the FRC decided to increase the maximum guarantee issuance limit of insurance companies by four times.

This decision will:

Significantly enhance the guarantee issuance capacity of domestic insurance companies

Enable the issuance of a full range of guarantees through the participation of reinsurance

Introduce a new financial instrument to the procurement, investment, and financing markets, while reducing financing risks for infrastructure, housing, and investment projects and contributing to the diversification of financial market instruments

Ulaanbaatar Investment and Management Company (UBIM), a municipally owned enterprise, will support the implementation of this decision and work to ensure its effective execution.

 

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