The insurance sector in Uzbekistan is undergoing dynamic changes as a result of digital transformation, regulatory reforms, and efforts to align with international standards. Despite positive trends such as increased capitalization, diversification of insurance products, and wider adoption of electronic contracts, the sector faces significant challenges. Low public trust, weak insurance culture, limited regional coverage, and insufficient promotion of voluntary insurance products continue to hinder the full realization of the market's potential. The insurance penetration rate and insurance density in Uzbekistan remain significantly below global averages. This article examines the key problems impeding the development of innovative insurance services in Uzbekistan and proposes comprehensive solutions aimed at enhancing digitalization, fostering financial literacy, diversifying product offerings, and strengthening regulatory frameworks. Drawing comparisons with international best practices, the study highlights strategic pathways to foster a resilient, inclusive, and innovation-driven insurance market.